Northern Data, dismissed executives sue for fraud. The company is 51% owned by Tether

Two former executives Northern Datais a German listed company specializing in cryptocurrency infrastructure and artificial intelligence. TetherThe company, which owns 51 percent of the company’s stock, claims he was fired over concerns about fraud allegations by the company’s CEO and COO, according to the complaint, filed last month in the Central District Court of California. Northern Datais managed by.

Detailed allegations of fraud and tax evasion

Joshua Porter and Gulsen KamaThe two former executives Northern Data The company is accused of “misrepresenting the strength of its financial position to investors, regulators and business partners” and “knowingly evading tens of millions of dollars in taxes.” The company strongly denies the allegations and says it is fighting vigorously to defend itself against false claims that are damaging to its company and business.

Company Statement

Northern Data He stressed that integrity is fundamental to the group and its leadership. He reiterated that as a publicly listed company, the company has in place comprehensive policies and procedures to ensure the accuracy of its financial reporting. The financial statements for fiscal year 2022 have received an unqualified audit opinion, and the company plans to publish its audited financial statements for fiscal year 2023 shortly.

US IPO Survey

Northern Data Inc. drew attention this week for another reason: Bloomberg News reported Monday that the company is planning a U.S. IPO for its cloud-computing and data-center business.

Banks involved in the valuation suggested a valuation of between $10 billion and $16 billion, roughly equivalent to Northern Data’s market capitalization of 1.3 billion euros ($1.4 billion) as of Monday’s close. Potential advisers were basing their assessment on the company’s partnership with Tether Group.

Bankruptcy and fraud accusations

Joshua PorterAppointed COO of Northern Data He was named president of Bayern Munich’s U.S. subsidiary in April 2022 and then promoted to president and CEO of North America in January 2023, and said he was fired in March 2023 after raising concerns about the financial condition of the German parent company, which he described as “borderline insolvent.” The company owed $30 million in taxes to German and nearly $8 million in other liabilities, while having just $17 million in cash and a monthly burn rate of $3 million to $4 million, according to the complaint dated June 21, 2024.

Resistance to authorities and tax regulations

The complaint states: Northern Data Illegally evaded 2021 U.S. taxes. Deloitte allegedly refused to support Northern Data The decision not to pay taxesIRS They will be taxed on their cryptocurrency mining profits in the U.S. Instead of changing their business structure and tax treatment to avoid violating U.S. law, Northern Data They are suspected of taking alternative measures to illegally evade taxes.

Internal Reactions and Results

Gulsen KamaAppointed to Northern Ireland data She resigned as the company’s North American CFO in July 2022 and was subsequently promoted to group deputy CFO, alleging that she repeatedly reported financial irregularities to the company’s global leadership, to no avail. Kama She claims she was fired in June 2023 after alerting management to the misconduct taking place. KPMGThe accounting firm, which audited the company for 2020 and 2021, has reportedly expressed concerns about the company’s liquidity position as a going concern.

Auditor replacement and financial difficulties

KPMG Not being employed in 2022 and Kama And the company’s leadership got even worse. Northern Data Appointed Liebhardt & Collegen A new auditing firm was established, based in Stuttgart and consisting of about 15 members. KPMG and Tether He did not respond to a request for comment.

Legal Actions and Future Outlook

Northern Data The company asked the court to seal parts of the complaint, arguing that they contain confidential communications protected by attorney-client privilege. The plaintiffs reserved their right to challenge the sealing order. The company recently delayed the release of its audited financial statements for fiscal year 2023 to July 12. The company previously said the report would be released by the end of the first half of 2024. In March 2024, KPMG The company reported that due to its reliance on Bitcoin sales, there was “significant uncertainty about the group’s ability to continue as a going concern.” TetherEquity loans.


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