Sacked Northern Data Execs File Suit Against Tether-Backed Company, Alleging Fraud

As a researcher, I’d put it this way: “Northern Data is Europe‘s leading Bitcoin mining company, and they expand their business beyond cryptocurrency by running data centers dedicated to artificial intelligence.”

The two executives, Joshua Porter and Gulsen Kama, have accused Northern Data in a newly revealed California lawsuit of deceiving investors regarding its financial health. They claim that the company concealed its precarious financial situation, being on the brink of insolvency, and intentionally evaded taxes amounting to possibly tens of millions of dollars.

Amid increasing speculation in the media, Northern Data is facing accusations as rumors swirl about the possibility of an initial public offering (IPO) in the United States for its artificial intelligence branch. According to reports from Bloomberg, this division could be worth as much as $16 billion.

When Porter initially joined Northern Data’s U.S. subsidiary as COO, he had a limited understanding of the company’s financial situation. However, upon being promoted to CEO of the U.S. arm, he gained access to more information. Shockingly, he discovered that the company held a significant tax liability of approximately $30 million in Germany and additional debts amounting to nearly $8 million. Simultaneously, the company had a relatively small cash reserve of around $17 million, with monthly expenses ranging between $3 million and $4 million.

In the years past, Porter became increasingly anxious about Northern Data’s potential significant U.S. tax debts. The lawsuit claims that the company engaged in extensive tax evasion during its formative period without any intention to rectify this issue. Porter feared that Northern Data’s U.S. tax obligations could amount to a substantial sum, potentially reaching tens of millions of dollars. If the Internal Revenue Service (IRS) were to audit the company, there was a risk it might not be able to cover these debts and face insolvency.

Porter voiced his worries to the higher-ups at Northern Data, but they seemed unwilling to address them. Frustrated, Porter contemplated taking more drastic action by contacting the board of directors. Shortly after this threat, he claimed he was terminated from his role. Perplexingly, his superiors attributed his dismissal to an “internal decision to eliminate the North American COO position” – a title I hadn’t held for months.

Kama, who initially held the position of CFO for Northern Data’s U.S. branches, was later advanced to become the group’s CFO. However, she raised red flags about potential accounting and securities fraud issues to her superiors at Northern Data. Unfortunately, her concerns fell on deaf ears as the CEO, Aroosh Thillainathan, and COO, Rosanne Kincaid-Smith, were reportedly involved in perpetuating these fraudulent activities according to the lawsuit.

Kama asserted that she was terminated from the company unlawfully as a reprisal for having reported suspected fraudulent practices repeatedly.

“According to the plaintiff’s attorneys, I was let go from Northern Data due to my warnings that the company was blatantly disregarding securities and tax regulations. I made efforts to prevent the company from providing misleading information during its audit process and sought to establish audit controls and management oversight at the highest levels within Northern Data.”

Porter and Kama are filing a lawsuit against Northern Data, claiming wrongful termination. The exact amount of damages they are seeking has not been disclosed yet in the complaint. However, their lawyers mention that potential repercussions from Northern Data’s alleged actions could result in significant financial consequences, possibly reaching into the millions of dollars.

A representative for Tether chose not to address ongoing legal issues but reassured investors and stakeholders of their dedication to trust and adherence to guiding principles. Maintaining the utmost integrity and transparency, they are self-assured in the future prospects of the business and industry.

Northern Data did not respond to CoinDesk’s request for comment by press time.