Flake Digital, a Bitcoin mining company traded on the Nasdaq stock exchange, is the subject area of a class-activity lawsuit that alleges the company fabricated the extent of its Bitcoin (BTC) mining operations.

According to the lawsuit, which was filed in the Southern District of New York court on Wednesday by plaintiff Anthony Pauwels, Bit Digital misled investors and made materially simulated claims nearly the extent of its Bitcoin mining business, causing pregnant fiscal impairment for investors.

Specifically, the plaintiff references an investigative written report past J Capital Inquiry that claims Chip Digital simply lied about having Bitcoin mining farms in operation across China. The firm's website claims to accept over 40,000 mining rigs currently in operation, exerting a hash rate of two,253 petahashes per 2d, having successfully mined over 1,500 BTC since the kickoff of 2020.

However, researchers at J Majuscule say they contacted regime officials in the Chinese provinces in which Bit Digital claim to operate, only to find that no i had always heard of them.

When J Upper-case letter'southward research hitting news headlines, Bit Digital's stock price plummeted 25%. From BTBT's peak valuation of $29.27 in early on January, the stock price has since fallen 44% to the current valuation of around $xvi.

On Tuesday, Bit Digital issued a response to the claims made past J Capital, pointing out that the company had filed all of its documentation with the Securities and Substitution Committee and had always sought to update investors and regulators with authentic information.

However, the plaintiff in the lawsuit against Bit Digital says the firm's executive leadership — CEO Min Hu and chief financial officer Erke Huang — were in a position to dictate the contents of any and all documents relating to the running of the business:

"Considering of their positions with the Visitor, [Hu and Huang] possessed the power and potency to control the contents of the Company's reports to the SEC, press releases and presentations to securities analysts, money and portfolio managers and institutional investors, i.e., the market."

Pauwels seeks reparations for the 1,000 units of Bit Digital shares he purchased at a toll of $21.81 each on December. 12, 2020, as well as other compensatory damages, court fees and expenses.

The plaintiff has demanded a trial by jury. No legal response has been made by Bit Digital at this time, nor did the visitor reply to Cointelegraph's request for comment.