Tether-Backed Crypto Firm Faces Fraud Accusations From Former Executives

Northern Data, a prominent cryptocurrency and AI infrastructure company backed by Tether, is facing serious fraud allegations from two former executives. The lawsuit, filed in California, accuses the company of financial misrepresentations and tax evasion. These allegations are potentially far-reaching, threatening Northern Data’s operations as well as its plans for a multi-billion dollar U.S. IPO.

This incident raises serious concerns about transparency and accountability in both the cryptocurrency and AI sectors. If these allegations prove true, they could have a serious impact on investor confidence in these industries. Additionally, they could lead to increased regulatory scrutiny and completely change the face of cryptocurrency and AI businesses.

Lawsuit details and financial irregularities

The lawsuit against Northern Data was brought by former executives Joshua Porter and Gulsen Khama, who claim they were fired after raising suspicions of financial misrepresentations and tax evasion by Northern Data employees.

CEO and COO.

According to the plaintiffs, Northern Data misrepresented its financial strength to investors, regulators and business partners. The plaintiffs allege that the company was “on the verge of insolvency” with significant tax liabilities and limited cash reserves. Specifically, they allege that Northern Data had tax liabilities of $30 million and an additional debt of nearly $8 million in Germany, while having only $17 million in cash and a monthly burn rate of $3 million to $4 million.

The lawsuit also accuses Northern Data of “rampant tax evasion” and potentially owing tens of millions of dollars in back taxes in the U.S. The allegations are particularly damaging as Northern Data is reportedly considering a U.S. IPO for its AI cloud computing and data center business that could value it at between $10 billion and $16 billion.

Adding further suspicion, the complaint details concerns raised by Northern Data’s former auditors, KPMG, about the company’s liquidity position. Northern Data has since replaced its auditors with boutique Stuttgart-based law firm Liebhard & Kollegen. The company has also delayed the publication of its audited financial statements for the 2023 fiscal year to July 12, 2024, raising further questions about its financial position.

Read also: German government to sell another 547 Bitcoins, rejecting lawmakers’ proposal

Tether’s Involvement and Its Impact on the Industry

At the center of this controversy is Tether’s acquisition of a 51% stake in Northern Data through a strategic investment in 2023. As a major player in the crypto world, Tether’s involvement could have major implications for the entire crypto market.

“This lawsuit and its potential outcomes could impact investor confidence not only in Northern Data but in the entire cryptocurrency and AI sector. The lawsuit highlights the difficulty of maintaining financial transparency and regulatory compliance in these rapidly evolving industries.”

Northern Data lost a petition to have parts of the complaint redacted on the basis of attorney-client privilege, further complicating the case, a move that could raise further questions about transparency and affect how the case is perceived by the public and potential investors.

As the case progresses, it will likely attract attention from regulators and industry participants, and its outcome could shape future regulatory approaches to cryptocurrency and AI companies, particularly with regard to financial reporting and corporate governance practices.

Read also: Ethereum Drops 10%, Justin Sun Faces $66 Million Loss, Here’s Why

Tether and BTguru collaboration in Türkiye

The Memorandum of Understanding between Tether and BTguru marks an important step towards integrating digital assets into mainstream financial operations in Turkey. The agreement outlines plans to create educational initiatives to educate private and public stakeholders about the benefits of cryptocurrencies and blockchain technology. These programs aim to increase understanding and responsible use of these technologies across a range of sectors.

Additionally, Tether and BTguru plan to explore the potential of peer-to-peer (P2P) technology. The companies aim to leverage BTguru’s extensive network to facilitate dialogue with key financial institutions, encouraging broader acceptance and integration of digital assets within traditional banking frameworks. This aspect of the partnership highlights a strategic move to bridge the gap between traditional banking and the evolving cryptocurrency environment.

Read also: Coinbase, MicroStrategy, and Bitcoin Miner Shares Continue to Fall Ahead of U.S. Jobs Report


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