More than a dozen investors filed a lawsuit Thursday alleging fraud against the founders of Rhodium Enterprises, a bitcoin mining company based in Rockdale.
The lawsuit, filed by lawyers from Dallas-based Iacuone McAllister Potter, accuses the defendants — including Rhodium executives and Fort Worth-based Imperium Investments Holdings, LLC — of intentionally deceiving the investors to secure a $33 million investment. The lawsuit, filed in Tarrant County District Court, claims the defendants concealed crucial information and engaged in self-dealing for personal gain.
“Put simply, defendants lied to, and stole from, plaintiffs,” lawyers for the investors wrote.
Rhodium filed for Chapter 11 bankruptcy in August in the Southern District of Texas.
The investors assert that material facts about their investments and Rhodium’s business operations were deliberately kept from them.
The defendants failed to disclose information about a pending sale of Rhodium’s operational facilities to Riot Blockchain, a direct competitor, according to the lawsuit.
“Frankly, it is hard to imagine a more material disclosure event, and had defendants disclosed this critical information, as they were required by law, plaintiffs would not have invested in the first place,” the investors’ lawyers wrote.
The investors point to text messages between Rhodium executive leader Nathan Nichols, who is named as a defendant, and Chad Everett Harris, then-CEO of the company that owned the facilities for Rhodium’s operations, to prove the defendants knew about the sale and chose to withhold the information from the investors.
In the text messages, Harris informs Nichols of the sale. Nichols asks whether it is OK to tell their partners. Harris tells Nichols to share the news with some people but to “stop it” with certain others. Nichols responded, “Will do.”
The lawsuit also claims the defendants exaggerated Rhodium’s future growth prospects, falsely claiming significant returns from the expansion of operations.
Lawyers for the defendants were not listed as of Friday morning.
The case is 345 Partners SPV2 LLC, et al. v. Imperium Investments Holdings, LLC, et al., Cause No. 342-360258-24 in the 342nd District Court in Tarrant County.