Bitcoin Miner Northern Data Moves to Dismiss Ex-Employees’ Whistleblower Suit

On Monday evening, Northern Data’s legal team submitted a request to dismiss the federal lawsuit. They described the case as a “prototypical instance of frivolous litigation” and accused the two plaintiffs, Gulsen Kama and Joshua Porter, of having short-lived and unsuccessful stints at the company. Kama was terminated due to cause following her inadequate performance, while Porter was let go due to his lack of productivity.

In their motion to dismiss, Northern Data’s legal team stated that Porter and Kama requested exorbitant “severance” payments which were rejected. Subsequently, these former employees have rebranded themselves as “whistleblowers,” aiming to financially benefit from allegations they know to be unfounded or potentially false.

Monday’s filing disclosed that Kama has prior experience with lawsuits against past employers. In 2019, she initiated a whistleblower complaint against Jackson Hewitt, accusing the tax preparation firm of wrongfully terminating her following her reports that the company misrepresented plans to move in order to secure a $2.7 million tax incentive from New Jersey. Last year, Kama brought a lawsuit against Quest Diagnostics for alleged workplace discrimination based on sex and ethnicity. However, the outcomes of those whistleblower actions have yet to be determined.

A lawyer for Kama and Porter did not respond to CoinDesk’s request for comment.

Northern Data’s request to dismiss the case is based on procedural grounds, contending that the California court does not have jurisdiction over the defendants, who are Delaware-incorporated and headquartered in Virginia. The legal team further argues that the alleged fraud claims lack sufficient detail. They characterize these claims as inflammatory but unsubstantiated.

On August 19, 2024 at 1:30 pm Pacific Time (which is equivalent to 20:30 UTC), a court in Los Angeles will convene for a hearing regarding the request to throw out the case.

Explosive allegations

In their revised lawsuit against their previous employer, Northern Data, Kama and Porter claimed shocking revelations. They accused the company of misrepresenting its financial health to investors, concealing its near-insolvency status. Furthermore, they alleged that Northern Data was engaging in deliberate tax evasion, possibly defrauding authorities of tens of millions of dollars.

As a crypto investor following the news closely, I’ve noticed an increasing media frenzy surrounding the rumors that the Tether-backed tech firm is contemplating an Initial Public Offering (IPO) for its artificial intelligence unit in the United States. According to reports from Bloomberg, this potential offering could value the AI unit at up to a staggering $16 billion.

In their Monday filing, Northern Data’s legal team remained silent on market rumors but emphasized that the run-up to an Initial Public Offering (IPO) is a delicate phase for a business. It’s common knowledge that unfounded allegations of fraud, regardless of their recklessness, can derail this crucial procedure.

According to Porter and Kama’s lawsuit, the company reportedly faced a substantial tax debt of around $30 million from German authorities, along with nearly $8 million in additional taxes. At the same time, they claim that the firm had only $17 million in cash on hand and was losing between $3 million and $4 million per month. The complaint also accuses the company of engaging in extensive tax evasion practices during its formative years without any intention to rectify the issue. If audited by U.S. authorities, they warn that the potential liability for unpaid taxes could amount to tens of millions of dollars.

Both Kama and Porter claimed they were fired after bringing their concerns to supervisors.

A spokesperson for Northern Data said the firm “refutes the allegations in the strongest terms.”

“The timing of these unfounded accusations from former employees, made public mere days after media rumors about a possible corporate financing event and on the brink of releasing our 2023 financial reports, is no accident. These claims are financially driven and wholly unsubstantiated. We will fiercely challenge them to shield our company from unwarranted harm caused by these false accusations.”

The representative noted that the company boasts sufficient funds and an impressive growth strategy, projecting a revenue increase of over threefold by 2024.