Bitfarms founders may not be acting in ‘best interests’ of shareholders

Bitcoin mining giant Riot Platforms is on track to acquire its rival Bitfarms for $950 million, accusing Bitfarms founders of not acting in the best interests of all shareholders.

In an attempt to become the “largest publicly listed Bitcoin miner” globally, American company Riot Platforms has made an acquisition offer of all BITF shares for $2.3 per share to Bitfarms, totaling the acquisition at $950 million.

In a press release on May 28, the Colorado-headquartered crypto mining company says its offered cash and common stock in a deal that would see Bitfarms’ shareholders owning “up to approximately 17% of the combined company.”

“This cash and stock proposal would provide Bitfarms’ shareholders with a substantial premium and immediate cash value, as well as significant potential for future value creation through participation in a financially and commercially stronger company with a well-defined strategy, led by an established and proven management team.”

Riot Platforms

The proposal was originally delivered privately to the Bitfarms board in late April, Riot says, adding that the board rejected it “without engaging in substantive dialogue with Riot.” The firm also says new allegations in a $27 million lawsuit brought by Bitfarms’ recently terminated chief executive Geoffrey Morphy “raise serious questions about whether certain directors are committed to acting in the best interests of all shareholders.”

“We are deeply concerned that the founders on the Bitfarms Board — Nicolas Bonta and Emiliano Grodzki — may not be acting in the best interests of all Bitfarms shareholders.”

Riot Platforms CEO Jason Les

Now, Riot plans to set up a special meeting with Bitfarms’ shareholders after May 31 to add new, well-qualified and “independent directors to the Bitfarms Board.” After making the acquisition offer, Riot bought 10% of Bitfarms’ shares, which caused BITF’s stock to rise by almost 10% to $2.21, according to data from Google Finance.

In mid-May, Geoffrey Morphy filed a lawsuit against Bitfarms in the Superior Court of Ontario, claiming breach of contract, wrongful dismissal, and aggravated and punitive damages after the firm announced his “smooth” departure earlier in March.