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The German financial regulator has lodged a criminal complaint against senior staff at Northern Data, accusing it of possible market manipulation.
The move by BaFin came on Friday, a day after the Frankfurt-based IT company, which serves shelves of strong servers and services to Bitcoin miners, published financial results for 2020.
The unaudited numbers, which came after months of delays, were much worse than the previous guidance of the company. Northern Data reported an operating loss of € 12.3 million, compared to previous expectations of operating profit of € 45m- € 60m. Revenue amounts to € 16.4 million, against the guidance of € 120 million – € 140 million.
BaFin told the FT that the watchdog had reported possible market manipulation “in the context of Northern Data” to criminal authorities, but declined to comment further. Frankfurt’s criminal prosecutors, to whom the complaint was lodged, did not respond to requests for comment.
A Northern Data lawyer told the FT on Sunday that his client was investigating the case.
Shares of Northern Data fell 43% immediately after news of the criminal charge, first reported by Wirtschaftswoche, but recovered half of their losses in the late trading session to close 21% on Friday.
German financier Christian Angermayer, an influential investor in Northern Data, declined to comment.
At its peak in February 2021, Northern Data was valued at € 1.7 billion on the Frankfurt Stock Exchange. Since then, it has lost 60 percent of its market capitalization.
The company is accused last year to mislead investors in an anonymous article on Medium.com stating that Northern Data overestimates its skill in ‘high-performance computers’ and underestimates confidence in bitcoin miners. The article argued that Northern Data’s hosting services seemed so strangely profitable that the company found either ‘the books’ or ‘the dumbest customers in the crypto industry’.
Northern Data denied any wrongdoing at the time. The Medium.com placement has since been taken offline as it is ‘being investigated or found to be in breach of the media rules’, the website states.
In An offer Published on Thursday, Northern Data said that the large gap between clues and reported numbers was due to the fact that it “could not realize the revenue with our two major clients”, as these transactions’ did not lead to the necessary recognition of revenue in the financial year 2020 ”.
Because Northern Data was still acquiring the former customers, it is said that dealing with them “is not expected to result in revenue in the 2021 financial year”.
This article has been amended to reflect that Northern Data’s revenue guidance for 2020 was € 120m – € 140m.