Bitcoin Mining Company Northern Data Seeks Dismissal of Former Employees’ Whistleblower Lawsuit

European bitcoin mining company Northern Data is facing legal action from two former executives who claim they were unjustly dismissed after raising concerns about the firm’s financial stability and alleging tax evasion.

In response to the lawsuit, Northern Data’s legal team has filed a motion to dismiss the case, labeling it as a “classic example of malicious litigation.” The company contends that the two plaintiffs, Gulsen Kama and Joshua Porter, had short and unproductive tenures at the company, with Kama being terminated for cause and Porter laid off due to lack of productivity.

The motion to dismiss highlights that when Kama and Porter demanded severance payments, Northern Data refused, leading the former employees to label themselves as whistleblowers and pursue personal gain through what the company claims are false allegations.

Furthermore, it was noted in the filing that Kama has a history of filing lawsuits against former employers, including a whistleblower suit against tax preparer Jackson Hewitt in 2019 and a discrimination suit against Quest Diagnostics last year.

A lawyer representing Kama and Porter did not provide a response to requests for comment from CoinDesk.

The motion to dismiss argues that the California court overseeing the case lacks jurisdiction over the corporate defendants, the U.S. subsidiaries of the German tech company, which are incorporated in Delaware and have principal places of business in Virginia. Additionally, the motion asserts that the fraud claims lack specific details and are baseless.

A hearing to discuss the motion to dismiss is scheduled to take place in a Los Angeles court on August 19, 2024, at 1:30 pm local time (20:30 UTC).

The amended complaint filed by Kama and Porter contains serious allegations against Northern Data, accusing the company of deceiving investors about its financial health, allegedly being on the verge of insolvency, and engaging in significant tax evasion.

These allegations emerged amid speculation that the Tether-backed tech firm is contemplating a U.S. initial public offering (IPO) of its artificial intelligence division, which was reportedly valued at up to $16 billion by Bloomberg.

While Northern Data’s lawyers refrained from commenting on market rumors in their Monday motion, they emphasized the sensitivity of the period leading up to an IPO and the potential disruption caused by public accusations of fraud.

Kama and Porter claim that Northern Data had substantial German tax liabilities and other financial obligations exceeding available cash, with allegations of tax evasion and lack of remedial measures to address the issue, potentially leaving the company liable for significant U.S. tax liabilities.

Both former executives assert they were terminated after raising these concerns with management.

In response, a spokesperson for Northern Data vehemently denied the allegations, attributing them to financial motives and timing related to potential capital market activities and upcoming financial disclosures. The company stated it would vigorously contest the claims to protect its reputation and business interests.

The spokesperson further emphasized that Northern Data is well-financed and anticipates significant revenue growth in 2024.