Pomerantz Law Firm Initiates Class Action Suit Against Bitfarms Ltd.
Pomerantz Law Firm Files Class Action Against Bitfarms Ltd.
On June 12, 2025, Pomerantz LLP announced the initiation of a class action lawsuit against Bitfarms Ltd. (NASDAQ: BITF) and certain of its officers. This legal action, presented in the United States District Court for the Eastern District of New York, is aimed at recovering damages for investors who purchased Bitfarms securities between March 21, 2023, and December 9, 2024. The case is documented under the docket number 25-cv-02630 and addresses allegations of violations of federal securities laws.
The lawsuit represents a broad class of individuals and entities that acquired Bitfarms securities during this designated period, alleging that not only did Defendants fail to properly disclose vital information regarding the company’s financial situation and operational integrity, but they also misled investors about the prospects and workings of the corporation. Affected investors have until July 8, 2025, to apply to be recognized as Lead Plaintiffs.
Background on Bitfarms
Bitfarms operates a series of Bitcoin data centers across Canada, the United States, Paraguay, and Argentina. Their model involves mining Bitcoin, which entails the validation of transactions on the Bitcoin blockchain using specialized computers known as miners. Once Bitcoin units are mined, Bitfarms either retains them as digital assets or converts them into U.S. dollars through various cryptocurrency trading platforms. This operational strategy also includes selling Bitcoin assets strategically to maintain liquidity.
When engaging in these sales, Bitfarms must ensure that they report the proceeds appropriately on cash flow statements, which detail the cash generated or spent across different operational activities. These statements are typically divided into three parts: cash flow from investing activities, cash flow from operating activities, and cash flow from financing activities. Each of these sections delivers insight into how much money the company brings in, spends, and raises, revealing its overall financial health.
In 2021, the company took significant steps to raise capital through the issuance of warrants, financial instruments that give holders the right to purchase shares at specific prices. However, by March 2024, Bitfarms acknowledged a substantial flaw in its internal controls over financial reporting, specifically regarding the classification of these 2021 warrants. It became apparent that these warrants should have been considered financial liabilities rather than equity instruments. Following this revelation, Bitfarms claimed that it was taking measures to enhance its internal controls, including hiring qualified professionals and involving legal consultants to address complex financial agreements.
Despite these efforts, the complaint asserts that the defendants continually issued misleading statements about the company’s financial condition. By not addressing their internal controls' deficiencies, they miscommunicated the cash flow from digital asset sales—misclassifying it as operating rather than investing activities and overstating their progress in addressing the identified weaknesses.
This mismanagement culminated when Bitfarms, on December 9, 2024, announced the need to restate its financial statements for fiscal years 2022 and 2023 due to erroneous reporting regarding digital asset sales classification. This announcement led to a significant drop in the company’s stock price, further emphasizing the financial world's sensitivity to transparency and accuracy.
In the follow-up Annual Report for 2024 filed with the SEC, Bitfarms reiterated its efforts to remediate its financial reporting weaknesses but admitted that the completion of these efforts was delayed until 2025. This inconsistency raises additional concerns about the company’s credibility and transparency moving forward.
The Role of Pomerantz LLP
Acknowledged as a leading firm specializing in corporate and securities class litigation, Pomerantz LLP continues to uphold the legacy of its founder, Abraham L. Pomerantz, a pioneer in securities class action law. With a strong commitment to advocating for investors affected by securities fraud and corporate malfeasance, Pomerantz has successfully recovered billions of dollars on behalf of class members.
As this class action develops, impacted investors are encouraged to seek updates and potentially join the lawsuit to recover their losses. For further inquiries, individuals can reach out to Pomerantz LLP or visit their website at www.pomerantzlaw.com.