Pomerantz Law Firm Announces the Filing of a Class Action Against Bitfarms Ltd. and Certain Officers - BITF

NEW YORK, May 20, 2025 /PRNewswire/ -- Pomerantz LLP announces that a class action lawsuit has been filed against Bitfarms Ltd. ("Bitfarms" or the "Company") (NASDAQ: BITF) and certain officers. The class action, filed in the United States District Court for the Eastern District of New York, and docketed under 25-cv-02630, is on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired Bitfarms securities between March 21, 2023 and December 9, 2024, both dates inclusive (the "Class Period"), seeking to recover damages caused by Defendants' violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.

If you are an investor who purchased or otherwise acquired Bitfarms securities during the Class Period, you have until July 8, 2025, to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Danielle Peyton at [email protected] or 646-581-9980 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased. 

[Click here for information about joining the class action]

Bitfarms operates integrated Bitcoin (also referred to as "BTC") data centers in Canada, the United States ("U.S"), Paraguay, and Argentina.  The Company primarily owns and operates data centers housing computers (referred to as "miners") designed for the purpose of validating transactions on the Bitcoin Blockchain (referred to as "mining").  Once BTC are mined, Bitfarms keeps them as digital assets or exchanges them for U.S. dollars through established cryptocurrency trading platforms.  According to the Company, Bitfarms' financing strategy involves, among other things, strategically selling its BTC assets.

When Bitfarms sells its digital assets, the Company is required to account for the proceeds it receives from those sales on its cash flow statement, which provides an accounting of the cash used in operations, including working capital, financing, and investing.  A company's cash flow statement generally includes three sections: (i) cash flow from investing activities, which reports how much cash has been generated or spent from investment-related activities in a specific period; (ii) cash flow from operating activities, which indicates the amount of money a company brings in from its ongoing, regular business activities, such as manufacturing and selling goods or providing a service to customers; and (iii) cash flow from financing activities, which delineates a company's financing, how it raises money, and how it pays money back by highlighting actions such as stock issuances, borrowing money, repurchasing shares, and repaying debt.

In 2021, the Company began to raise capital through, inter alia, the issuance of warrants (the "2021 Warrants")—i.e., derivatives that gives the holder the right but not the obligation to buy an underlying security at a certain price, quantity, and future time.

In March 2024, the Company identified a material weakness in its internal control over financial reporting with respect to the Company's classification of the 2021 Warrants.  Specifically, the Company acknowledged that "the control over accounting for complex financing transactions did not operate effectively in 2021 as the warrants issued in 2021 should have been classified as a financial liability and accounted for at fair value through profit and loss, and not as equity instruments."  However, since identifying the foregoing weakness, Bitfarms has consistently represented that it was implementing remediation efforts including "expanding the finance team to include more Chartered Professional Accountants with technical expertise and experience in evaluating more complex areas of [International Financial Reporting Standards] Accounting Standards," "involving the Company's legal counsel on evaluating complex agreements involving financial instruments," and "engaging third-party consultants to assist with assessing the accounting for complex financial instruments and review of financial statements." Further, the Company has consistently stated that "its remediation plan is expected to be completed during 2024."

The Complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operations, and prospects.  Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Bitfarms maintained deficient internal controls over financial reporting; (ii) as a result, the Company incorrectly categorized proceeds derived from the sale of digital assets as a cash flow from operating activities rather than as a cash flow from investing activities; (iii) in addition, the Company overstated the extent to which it had remediated, and/or its ability to remediate, the material weakness in its internal controls over financial reporting related to its classification of the 2021 Warrants; (iv) the foregoing errors caused Bitfarms to misstate various items in several of the Company's previously issued financial statements; (v) as a result, these financial statements were inaccurate and would likely need to be restated; and (vi) as a result, the Company's public statements were materially false and misleading at all relevant times.

On December 9, 2024, Bitfarms issued a press release announcing that its consolidated financial statements for the fiscal years 2022 and 2023 contained a material error related to the classification of proceeds from digital asset sales and would need to be restated.  Specifically, the Company revealed that "Bitfarms previously categorized proceeds derived from the sale of digital assets as a cash flow from operating activities. In conjunction with the [United States Securities and Exchange Commission ("SEC")] review, it was determined that proceeds from the sale of digital assets should be classified as cash flow from investing activities."  Additionally, Bitfarms stated that it was also restating its financials "to adjust for an error in the accounting for the redemption of warrants in 2023." 

On this news, Bitfarms' stock price fell $0.13 per share, or 6.07%, to close at $2.01 per share on December 10, 2024.

Then, on April 1, 2025, Bitfarms filed its Annual Report on Form 40-F with the SEC, reporting the Company's financial and operating results for the year ended December 31, 2024 (the "2024 40-F").  With respect to the Company's accounting for the 2021 Warrants, the 2020 40-F reiterated Bitfarms' purported efforts to remediate the previously announced material weakness but revealed that "its remediation plan is expected to be completed after review and testing of controls during 2025," contrary to its prior representations that the remediation plan would be completed in 2024.

Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered billions of dollars in damages awards on behalf of class members. See www.pomlaw.com.

Attorney advertising.  Prior results do not guarantee similar outcomes.

CONTACT:
Danielle Peyton
Pomerantz LLP
[email protected]
646-581-9980 ext. 7980

SOURCE Pomerantz LLP