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

European
bitcoin
mining
firm
Northern
Data
is
pushing
back
against
a
whistleblower
suit
filed
by
two
former
executives
of
the
company
who
say
they
were
wrongfully
terminated
after
raising
concerns
about
the
company’s
financial
health
and
alleging
tax
evasion.

On
Monday
evening,
lawyers
for
Northern
Data
filed
a
motion
to
dismiss
the
federal
case,
calling
it
a
“textbook
example
of
bad
faith
litigation”
and
alleging
that
the
two
plaintiffs
–
Gulsen
Kama
and
Joshua
Porter
–
had
“unproductive,
brief
tenures
at
the
company”
after
which
Kama
was
fired
for
cause
and
Porter
was
laid
off
for
his
“lack
of
productivity”

“When
Porter
and
Kama
made
extortionate
demands
for
‘severance’
payments,
Northern
Data
rejected
them,”
Northern
Data’s
lawyers
wrote
in
the
motion
to
dismiss.
“In
response,
both
employees
now
style
themselves
as
‘whistleblowers’
and
seek
to
profit
personally
and
financially
from
allegations
that
they
know
–
and
have
every
reason
to
know
–
are
false.”

The
Monday
filing
also
pointed
out
that
Kama’s
suit
against
Northern
Data
is
not
her
first
rodeo
filing
lawsuits
against
her
former
employers.
In
2019,
she
filed
a
whistleblower
suit
against
tax
preparer
Jackson
Hewitt,
alleging
that
she
was
wrongfully
terminated
after
raising
concerns
that
the
company
lied
about
potentially
relocating
in
order
to
get
a

$2.7
million
tax
break
from
the
state
of
New
Jersey.
Last
year,
Kama
filed
suit
against
another
employer,
Quest
Diagnostics,
alleging
workplace
discrimination
on
the
basis
of
her
sex
and
ethnicity.
The
results
of
those
whistleblower
cases
were
not
immediately
clear.

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

Northern
Data’s
motion
to
dismiss
is
fairly
procedural
in
nature,
arguing
that
the
California
court
overseeing
the
case
should
toss
it
out
due
to
a
lack
of
jurisdiction
over
the
corporate
defendants
(in
this
case,
the
U.S.
subsidiaries
of
the
German
tech
company),
who
are
incorporated
in
Delaware
and
have
principal
places
of
business
in
Virginia.
The
lawyers
also
argue
that
the
fraud
claims
–
which
they
describe
as
“inflammatory
but
completely
unsupported”
–
lack
sufficient
particularity.

A
hearing
to
discuss
the
motion
to
dismiss
will
be
held
in
a
Los
Angeles
court
on
Aug.
19,
2024
at
1:30
pm
local
time
(20:30
UTC).

Kama
and
Porter’s
first
amended
complaint
against
their
former
employer
contained
explosive
allegations
that
Northern
Data
lied
to
investors
about
the
strength
of
its
finances,
hiding
the
fact
that
it
is
“borderline
insolvent,”
and,
additionally,
is
“knowingly
committing
tax
evasion
to
the
tune
of
potentially
tens
of
millions
of
dollars.”

The
allegations
came
amidst
growing
media
buzz
that
the
Tether-backed
tech
firm
is
considering
a
U.S.
initial
public
offering
(IPO)
of
its
artificial
intelligence
unit,
which

Bloomberg
reported
was
valued
at
up
to
$16
billion.

In
their
Monday
motion,
lawyers
for
Northern
Data
declined
to
comment
on
market
speculation
but
stressed
that,
if
it
were
true,
“the
period
leading
up
to
an
IPO
is
a
particularly
sensitive
time
for
a
company.
As
Plaintiffs
undoubtedly
know,
public
accusations
of
fraud
–
no
matter
how
irresponsible
–
can
disrupt
that
process.”

Porter
and
Kama
have
alleged
that
the
firm
had
a
“$30
[million]
German
tax
liability
and
additional
liabilities
of
almost
$8
[million]
while
simultaneously
having
only
$17
[million]
cash
on
the
balance
and
a
monthly
burn
rate
of
$3
[million]-$4
[million].”
Their
suit
also
alleges
that
the
firm
committed
“rampant
tax
evasion”
in
its
early
years
and
had
no
plan
to
take
remedial
measures
to
account
for
it,
potentially
leaving
them
liable
for
“tens
of
millions
of
dollars”
in
U.S.
tax
liabilities
if
it
were
to
be
audited.

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.”

“It
is
no
coincidence
that
these
allegations
from
disgruntled
former
employees
were
publicized
just
days
after
unconfirmed
media
speculation
that
the
company
is
evaluating
a
potential
capital
markets
event
and
just
ahead
of
the
publication
of
our
2023
accounts.
The
allegations
are
clearly
financially
motivated
and
completely
baseless.
We
will
contest
them
vigorously
to
protect
ourselves
against
false
assertions
which
damage
our
company
and
our
business.”

The
spokesperson
added
that
the
firm
is
“well
capitalized”
and
has
a
“very
robust
growth
plan,
with
revenue
expected
to
more
than
triple
in
2024.”