Hut 8 to pay $2.35M to settle investor lawsuit

Hut 8 Corp. agreed to pay $2.35 million to settle a proposed securities class action that accused the bitcoin miner of misleading investors about operational problems linked to its 2023 merger with U.S. Bitcoin Corp. The proposed settlement was filed Monday in the U.S. District Court for the Southern District of New York and covers investors who bought Hut 8 securities in the United States or on U.S.-based exchanges between Feb. 13, 2023, and Jan. 18, 2024. It requires preliminary and final approval from U.S. District Judge Victor Marrero.

Investors alleged Hut 8 failed to disclose energy and internet-related problems at King Mountain, a Texas bitcoin-mining joint venture in which U.S. Bitcoin held a 50% interest before the merger, and misrepresented USBTC’s financial condition during the merger process. The merger was announced in February 2023 and completed in November 2023. The complaint followed a short-seller report published on Jan. 18, 2024; Hut 8 shares fell more than 23% that day.

Hut 8 denied wrongdoing in court filings and maintained it did not violate the law or cause investor losses. The company disputed the short-seller report at the time, describing it as an effort to spread misinformation. The settlement does not include any admission of liability.

The litigation narrowed before the settlement. In September 2025, Judge Marrero dismissed investors’ Exchange Act claims and rejected Securities Act claims tied to alleged misstatements about USBTC’s financial condition. He allowed only Securities Act claims that alleged omissions about King Mountain’s infrastructure risks to proceed. Facing that narrower case, Hut 8 indicated it would seek judgment on the pleadings and challenged plaintiffs’ ability to trace aftermarket purchases to the registration statement, arguing registered and unregistered shares had been commingled after the merger.

Plaintiff counsel noted in filings that the traceability issue and the costs of continued litigation supported accepting the settlement. The $2.35 million payment represents roughly 19.6% of the maximum estimated recoverable damages of about $12.08 million. Counsel also referenced 2025 data for Securities Act-only settlements, reporting a median recovery of 12.9% and an average of 14.6%.

Market reaction to the settlement filing included about a 5% drop in Hut 8’s shares during pre-market trading on Tuesday. The case will proceed to the court’s approval process, where the judge will determine whether the settlement is fair and reasonable to the class.