Hut 8 pays $2.35 million to settle investor lawsuit over merger with US Bitcoin
Mining company Hut 8 has reached an agreement to pay $2.35 million to settle a class action lawsuit related to its merger with U.S. Bitcoin Corp. (USBTC). The deal awaits approval from the U.S. District Court for the Southern District of New York. Importantly, Hut 8 does not admit any wrongdoing, emphasizing that the settlement is not an acknowledgment of the allegations.
Nature of the Claims
The lawsuit was filed on behalf of investors who purchased Hut 8 securities between February 13, 2023, and January 18, 2024. The central point of the dispute was the merger of Hut 8 Mining Corp. and USBTC, completed in November 2023 through a stock exchange. The combined company was named Hut 8 Corp.
The plaintiffs alleged that Hut 8 overstated the benefits of the deal and failed to disclose significant problems at the King Mountain mining facility in Texas. USBTC owned a 50% stake in the King Mountain JV joint venture before the merger. Key claims included potential power outages and lack of access to high-speed internet at the facility, as well as undisclosed information about a related party among USBTC's major shareholders. Additionally, the lawsuit alleged that without the Hut 8 deal, USBTC could have faced bankruptcy, and its actual value was approximately 70% lower than the price paid.
Why the Amount Was Limited
On September 12, 2025, Judge Victor Marrero partially granted the defendants' motion to dismiss the case. The court fully dismissed the claims under the Exchange Act, and from the Securities Act claims, only those concerning statements about the King Mountain JV were retained. Claims regarding USBTC's financial condition before the merger were dismissed. Thus, the dispute narrowed to the issue of the completeness of risk disclosure related to King Mountain — a critical factor for a mining business where stable access to electricity and infrastructure is fundamental.
Path to the Agreement
On May 7, 2026, the parties held a one-day virtual mediation. Although it did not lead to an immediate result, on May 13, the parties accepted the mediator's proposal. The formal settlement agreement is dated June 18. The plaintiffs noted that $2.35 million represents about 19.6% of the maximum possible recovery of $12.08 million. In their assessment, this is above average for settlements in similar cases.
Analytical Commentary: This case highlights the importance of transparency in mergers and acquisitions in the crypto industry, especially when it comes to physical assets such as mining facilities. Hut 8 managed to minimize the damage, but the very fact of the lawsuit and the payment sends a signal to the market about the need for more thorough due diligence. At the same time, the company is successfully diversifying into AI infrastructure, which could become its main growth driver in the future.