Hut 8 pays $2.35 million to settle investor lawsuit over U.S. Bitcoin Corp merger

AI Miner, Hut 8 (NASDAQ: HUT), has agreed to a $2.35 million settlement to resolve a securities class action suit filed by investors claiming that the Bitcoin miner concealed operational problems at a Texas mining site acquired during its 2023 merger with U.S. Bitcoin Corp.

The proposed settlement deal was filed in the U.S. District Court for the Southern District of New York, and is awaiting approval from Judge Victor Marrero, according to TheEnergyMag.

Class action suit details

The filed class action suit included all shareholders who purchased Hut 8 securities between a period of Feb. 13, 2023, and Jan. 18, 2024. The merger with USBTC was closed during this period to form the current Hut 8 Corp, specifically in November 2023.

The prosecutors argued that Hut 8 oversold the merger’s value while leaving out vital details about King Mountain, a Bitcoin mining joint venture in West Texas where USBTC held a 50% stake. The core allegation in the lawsuit claims that the merger disclosures did not adequately describe the recurring power issues and unreliable internet connectivity at the site.

These omissions were said to be extremely significant by the plaintiffs, given it was a mining operation that depended on constant electricity and high-speed internet connectivity.

Hut 8’s settlement terms

Hut 8’s defense also included a challenge to share traceability, with arguments stating that registered shares from the merger had mixed with unregistered shares afterward in public trading. This mix was said to have made it difficult for aftermarket buyers to trace their holdings back to the period of registration.

Lead plaintiff Abhishek Maheshwari and the defendants reached an agreement regarding settlement after a full-day virtual mediation session on May 7 before JAMS mediator Jed Melnick. Though the session did not produce an immediate deal, both sides accepted the mediator’s proposal on May 13 and eventually signed a formal settlement stipulation on June 18.

The recovery of $2.35 million in the court settlement, equals about 19.6% of the previously estimated $12.08 million in total recoverable damages. This figure sits well above both the 2025 median (12.9%) and average (14.6%) recovery rates for settlements linked to Securities Act claims, according to the court filing.

Hut 8’s pivot since USBTC merger

The settlement reached helps to close a chapter from an earlier iteration of Hut 8 before massive changes were made to the company’s operation and interests. The company has shifted its strategy away from pure bitcoin mining toward AI data centers, high-performance computing, and power infrastructure.

In May, Hut 8 signed a 15-year lease worth $9.8 billion for a 352-megawatt Texas facility designed around NVIDIA’s reference architecture, according to Traders Union. Shares have climbed more than 640% over the past year, trading near $120 as at time of writing.