Sacked Northern Data Execs File Suit Against Tether-Backed Company, Alleging Fraud

Two former executives from Northern Data, a German technology company backed by Tether, have A lawsuit was filed The company filed a lawsuit alleging that he was wrongfully fired after expressing concerns about its financial situation and alleging tax evasion.

Northern Data is the largest Bitcoin miner in Europe. In addition to Bitcoin mining, the company also operates a data center for artificial intelligence.

In a recently unsealed California lawsuit, two executives, Joshua Porter and Gulsen Khama, allege that Northern Data lied to investors about the strength of its financial position, concealed the fact that it was “on the brink of bankruptcy,” and “knowingly committed tax evasion amounting to potentially tens of millions of dollars.”

The allegations emerged amid growing media reports that Northern Data was considering a U.S. initial public offering (IPO) for its artificial intelligence unit. Bloomberg reported The company was valued at up to $16 billion.

Porter joined Northern Data’s U.S. subsidiary as COO and was later promoted to CEO of the company’s U.S. branch. It was only after his promotion that Porter was able to truly see behind the curtain the true state of the company’s finances, according to the lawsuit. Northern Data had “a $3 billion [million] Germany’s tax liabilities and additional debts amount to approximately $8 [million] At the same time, I only have $17 [million] Balance is cash, monthly burn rate is $3 [million]-$4 [million].”

Porter also grew increasingly concerned about the company’s potential tax liability in the United States. The lawsuit alleges that the company engaged in “rampant tax evasion” early in its life and had no plan to correct it. Porter worried that Northern Data’s U.S. tax liability “could easily amount to tens of millions of dollars” and that an audit by the Internal Revenue Service could force the company into bankruptcy.

Mr. Porter raised his concerns with his superiors at Northern Data. As his lawyers put it, his concerns were “ignored,” so Mr. Porter threatened to escalate the situation by appealing to the company’s board of directors. Shortly thereafter, he says, he was fired, and his superiors bizarrely blamed it on “an internal decision to eliminate positions at North American.” [COO]”It’s a position he hasn’t held for months.

Kama, who started as CFO of a U.S. subsidiary before being promoted to group CFO, reported similar concerns “regarding accounting and securities fraud” to his superiors at Northern Data but “to no avail as the CEO and COO continued to commit the accounting and securities fraud,” the lawsuit alleges. Northern Data’s CEO is Allush Thillainathan and its COO is Rosanne Kincaid Smith.

Kama claims he tried multiple times to warn the company about the fraud it allegedly committed, but was fired in unlawful retaliation for his whistle-blowing activities.

“Specifically, Mr. Kama was fired for warning Northern Data of serious violations of securities and tax laws, for preventing Northern Data from continuing to make fraudulent representations related to the company’s audit process, and for attempting to impose audit controls and governance procedures on Northern Data’s most senior executives,” the plaintiffs’ lawyers wrote.

Porter and Kama are seeking compensation for wrongful dismissal and special damages, an amount not yet disclosed, but their lawyers say in the lawsuit that Northern Data’s actions could expose them to “millions of dollars of liability.”

A Tether spokesperson declined to comment on “ongoing legal matters” but added, “We reaffirm our commitment to our investors and stakeholders to maintain trust and uphold the principles that guide our business. We have always conducted our business with the highest standards of integrity and transparency, and we are confident in the long-term potential of our company and the industry.”

Northern Data did not respond to CoinDesk’s request for comment at time of publication.

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