Germany's financial regulator BaFin has filed a criminal complaint against the senior staff of Bitcoin miner Northern Data.
The filing comes after Frankfurt-listed Northern Data posted unaudited financial results for 2020, showing a performance far below previous guidance.
The company previously said that it expected an operating profit of €45-€60 million ($52-70m) and revenues of €120m-€140m ($140-162m). But the results, which were delayed by several months, saw the company report an operating loss of €12.3m ($14.2m), with revenues of €16.4m ($19m).
The Federal Financial Supervisory Authority (BaFin) told the Financial Times that it had flagged potential market manipulation “in the context of Northern Data," but did not disclose any specifics.
The publication believes that BaFin is particularly interested in the acquisition of US crypto miner Whinstone in late 2019. At the time, the company said it was building “by far the largest Bitcoin mining facility worldwide with a capacity of one gigawatt on an area of over 100 acres in Texas.”
The scale and value of the site may have been overstated.
Whinstone was sold to cryptocurrency mining firm Riot Blockchain in April 2021 for €550m ($640m). This year, Northern Data also bought Hydro66's Node Pole data center in Northern Sweden, and Block.one's GPU farm Decentric.
Northern Data rebranded from Northern Bitcoin last year with a claim that it was also focusing on HPC and AI workloads, but has been dogged by rumors that it is still just a cryptocurrency business, making money off of the volatile Bitcoin currency.
Northern Data said that the complaint focuses on a potentially misleading ad hoc release that was published by the company in November 2019.
The company blamed the large gap between revenue expectations and reality on being “unable to realize the revenues with our two major customers” as those contracts “haven‘t led to the essential revenue recognition in FY 2020."
Shares in the company fell 43 percent following the news of the criminal investigation, but recovered slightly since.
