An application for a class action lawsuit against Apollo Power (TASE: APLP) has been submitted to the Tel Aviv District Court. The solar energy technology company is accused of misleading investors by making a false report. The matter at hand is how its share price jumped by 150% on December 18 after Apollo announced it entered the cryptocurrency mining business.
Class Action Lawsuit
Apollo Power, its chairman, CEO and directors are accused of gravely misleading investors by making an immediate report to the TASE which had crucial missing details. According to the application for a class action lawsuit, the accused “identified an attractive trend called blockchain.”
So, at the morning of the 18th, the company made a dramatic breaking announcement regarding an experiment in mining cryptocurrencies with its system. Investors were led to believe this was a breakthrough that will save significant electricity costs for miners, making the system more valuable.
With bitcoin at over $19,000 and ether close to $800 that day, the stock price of Apollo shot up in price from 4.3 shekels to over 10 shekels immediately after this first report, as many investors regarded the announcement as credible and bought the stock. However, just six hours later Apollo made a second report which made it clear, according to class action application, that the first announcement was, “partial, false, misleading, fake, fraudulent and at the very least negligent.”
Bitcoin Verbal Gymnastics
Apollo was forced by the Israel Securities Authority to issue its second announcement on the December 18, which revealed its earlier report was missing many crucial details. According to its accusers, the company used artistic verbal gymnastics to jam in the word bitcoin into the report “in order to motivate investors to buy the stock.” The ISA is already separately investigating the matter on its own, as we reported last week.
The second announcement revealed that the half hour experiment produced just 0.000054 ETH worth about 4 cents at the time. Furthermore it was made clear that the system can only mine about 35 cents worth of altcoins a day, and no bitcoin at all. There are also yet unestimated extra costs for mining with the system, while the original announcement said that the breakthrough can create a substantial additional income source for users. The class action lawsuit application thus accuses the company of causing great financial losses to the group of investors who bought it after the first report.
Should stock investors trust any firm that starts claiming to have some connection to bitcoin or it is all just pure hype? Tell us what you think in the comments section below.
Images courtesy of Shutterstock.