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Germany’s finance minister has filed a major complaint against Northern Data, accusing it of potentially damaging the market.
The BaFin move on Friday came a day after a Frankfurt-based IT company, which uses multiple power servers and provides support to miners in Bitcoin, announced the 2020 financial results.
The unidentified figures, which came a few months later, were much worse than the company’s initial improvement. Northern Data also reported a deficit of 12.3 million euros, contrary to previous expectations of a profit of € 45m- € 60m. Funds went in at € 16.4m against the 120m target – € 140m.
BaFin told FT that the patrons had recommended selling the market “according to Northern Data” to prosecutors but declined to comment further. Lawyers in Frankfurt, who appealed to them, did not respond to a request for comment.
A Northern Data attorney told FT on Sunday that his client was looking into the matter.
Northern Data shares fell 43% after hearing the lawsuit, which was first reported by Wirtschaftswoche, but recovered half of their losses at the end of the trade to close 21% by Friday.
German economist Christian Angermayer, an investor in Northern Data, declined to comment.
At the peak in February 2021, Northern Data was converted to € 1.7bn in the Frankfurt market. Since then, it has lost 60% of its market share.
The company was charged last year misleaders wrote an anonymous article on Medium.com claiming that Northern Data was exaggerating their skills in “high performance computing” and relying on relying on bitcoin miners. The article also noted that Northern Data’s social media services seem to be surprisingly profitable so the company either “book-baked” or “found unsustainable customers in the crypto market”.
Northern Data at the time denied any wrongdoing. Medium.com result have been removed from the internet how it is “investigated or found to be in violation of the Central Regulations”, the website says.
Mu the show published Thursday, Northern Data said a significant difference between the guide and the said numbers was introduced because it “could not recognize the revenue our two clients received” because the same “did not contribute to the necessary funding in FY 2020”.
Because Northern Data continued to find old customers, they say, its practices with them “were not expected to lead to financial recognition in 2021”.
The article has been updated to show that the Northern Data Cash 2020 revenue target was € 120m – € 140m.