Two
former
executives
of
Tether-backed
German
tech
company
Northern
Data
have
filed
suit
against
the
firm,
alleging
that
they
were
wrongfully
terminated
after
raising
concerns
about
the
company’s
financial
health
and
alleging
tax
evasion.
Northern
Data
is
the
largest
bitcoin
miner
in
Europe.
In
addition
to
bitcoin
mining,
the
company
also
operates
data
centers
used
for
artificial
intelligence.
In
their
recently
unsealed
California
lawsuit,
the
two
executives
–
Joshua
Porter
and
Gulsen
Kama
–
allege
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
come
amidst
growing
media
buzz
that
Northern
Data
is
considering
a
U.S
initial
public
offering
(IPO)
of
its
artificial
intelligence
unit,
which
Bloomberg
reported
was
valued
at
up
to
$16
billion.
Porter
joined
the
U.S.
subsidiary
of
Northern
Data
as
COO
and
was
later
promoted
to
CEO
of
the
U.S.
arm
of
the
company.
Only
after
his
promotion,
the
suit
claimed,
did
Porter
get
a
true
look
behind
the
curtain
at
the
reality
of
the
company’s
financial
situation.
According
to
Porter’s
suit,
Northern
Data
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].”
Porter
also
grew
increasingly
concerned
about
the
company’s
potential
U.S.
tax
liabilities.
The
suit
alleges
that
the
firm
committed
“rampant
tax
evasion”
in
its
early
years
and
had
no
plan
to
take
remedial
measures
to
account
for
it.
Porter
worried
that
Northern
Data’s
U.S.
tax
liability
“could
easily
be
in
the
tens
of
millions
of
dollars”
and,
if
it
were
to
be
audited
by
the
Internal
Revenue
Service
(IRS),
it
could
wind
up
insolvent.
Porter
took
his
concerns
to
his
superiors
at
Northern
Data.
When
his
concerns
“fell
on
deaf
ears”,
as
his
lawyers
described,
Porter
threatened
to
escalate
matters
by
going
to
the
company’s
board
of
directors.
Shortly
after,
he
said
he
was
fired
–
a
move
his
superiors
strangely
blamed
on
an
“internal
decision
to
eliminate
the
position
of
North
American
[COO]”
–
a
position
he
had
not
held
in
months.
Kama,
who
started
out
as
the
CFO
of
the
U.S.
subsidiaries
before
being
promoted
the
group’s
CFO,
reported
similar
concerns
“regarding
accounting
and
securities
fraud”
to
her
superiors
at
Northern
Data
–
”to
no
avail,
because
the
CEO
and
COO
were
perpetuating
the
accounting
and
securities
fraud,”
the
suit
claims.
Northern
Data’s
CEO
is
Aroosh
Thillainathan
and
its
COO
is
Rosanne
Kincaid-Smith.
After
repeated
attempts
to
warn
the
company
about
the
fraud
it
was
allegedly
committing,
Kama
claimed
she
was
sacked
in
an
act
of
illegal
retaliation
for
her
whistleblowing
activities.
“Specifically,
Kama
was
terminated
for
her
admonitions
that
Northern
Data
was
flagrantly
violating
securities
and
tax
laws
and
her
attempts
to
ensure
Northern
Data
did
not
continue
to
make
fraudulent
representations
in
connection
with
the
company’s
audit
process
and
to
impose
audit
controls
and
governance
procedures
on
Northern
Data’s
most
senior
management,”
the
plaintiffs’
lawyers
wrote.
Porter
and
Kama’s
suit
is
seeking
compensatory
and
special
damages
for
their
alleged
wrongful
termination.
Though
a
figure
has
not
yet
been
named,
their
lawyers
wrote
in
the
complaint
that
Northern
Data’s
alleged
activity
potentially
exposes
them
to
“millions
of
dollars
of
liability.”
A
spokesperson
for
Tether
declined
to
comment
on
“ongoing
legal
matters”
but
added:
“We
reaffirm
our
commitment
to
our
investors
and
stakeholders
to
maintain
trust
and
uphold
the
principles
that
guide
our
operations.
We’ve
always
operated
with
the
highest
standards
of
integrity
and
transparency
and
remain
confident
in
the
long-term
potential
of
the
company
and
sector.”
Northern
Data
did
not
respond
to
CoinDesk’s
request
for
comment
by
press
time.