The Financial Times reported that two former executives of Northern Data, a large European mining company, are suing the company, claiming that they were fired in retaliation for exposing suspected internal financial audits, tax evasion and securities fraud. They emphasized that the company may be on the verge of bankruptcy if it is required to pay tens of millions of dollars in evaded taxes.
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ToggleNorthern Data was fired in retaliation from former executives for telling too much truth
Northern Data, which owns Bitcoin mining and artificial intelligence cloud computing businesses, was sued last month by former executives Joshua Porter and Gulsen Kama for wrongful dismissal. They pointed out in recently disclosed legal documents that the company allegedly sold investors He concealed and deceived his true financial status and evaded more than tens of millions of dollars in taxes.
He evaded tens of millions of dollars in taxes and will face bankruptcy if he pays back taxes.
First, Porter, as the chief operating officer of Northern Data’s U.S. branch, learned the company’s true financial status after being promoted to CEO:
The company has US$30 million in back taxes due in Germany and nearly US$8 million in liabilities. However, the company only has US$17 million in cash on its books, and its monthly costs are still US$3 million to US$4 million.
At the same time, he also pointed out that in the face of increasingly clear encryption tax laws in the United States, Northern Data executives did not change its operating structure or tax system, but instead took action to illegally evade taxes on its mining profits:
The plaintiff is worried that the company's U.S. tax evasion amount may exceed tens of millions of dollars. If it is fined by the U.S. Internal Revenue Service (IRS) and required to pay back, the company may face bankruptcy as a result.
Porter also reported this to the CEO of the parent company and asked to report it to the board of directors, but was fired in retaliation.
Deceiving investors and partners
In addition, Gulsen Kama, as the chief financial officer of the U.S. branch, actively reported concerns about financial accounting and securities fraud to CEO Aroosh Thillinathan and chief operating officer Rosanne Kincaid-Smith, but the company still turned a blind eye:
The CEO and COO still lied about its financial status to investors and business partners at a meeting in mid-June, trying to hide the fact that it was close to bankruptcy.
The document reads:
The plaintiffs were fired after warning Northern Data of flagrant violations of securities and tax laws and trying to ensure the company would not continue to make fraudulent statements about its audit procedures.
Porter and Kama are seeking damages for wrongful dismissal and are concerned they may face criminal liability for the company's illegal conduct.
Last Monday, the company just expressed its intention to conduct an initial public offering (IPO) on the Nasdaq exchange in the United States next year, with the company's valuation as high as $16 billion.
Northern Data: False accusations, refuses to comment
In response, Northern Data denied the accusation and stated that it would vigorously defend itself:
As a listed company, we ensure the accuracy of our financial reports through comprehensive policies and procedures, and the 2023 audited financial report will be released soon.
In addition, Tether, a stablecoin issuer that is the company’s main investor and owns 51% of its shares, did not respond positively:
We reaffirm our commitment to our investors and stakeholders to operate with the highest standards of integrity and transparency while maintaining confidence in the company's long-term potential.
NB2.DE fell more than 23% that day
Following the release of the news, Northern Data stock (NB2.DE) fell 23.1% on the last trading day last Friday.
The stock price has fallen more than 39.7% from the recent high point when the IPO was announced on July 2, and the company's market value has also evaporated by US$523 million in the past week.
