A group of investors has filed a lawsuit alleging fraud against the founders of Rhodium Enterprises, a bitcoin mining company based in Rockdale, Texas.
The lawsuit, filed by attorneys with Iacuone McAllister Potter, claims the defendants, including Rhodium executives and Fort Worth-based Imperium Investments Holdings, LLC, intentionally misled the plaintiffs into investing a total of $33 million by concealing critical information and engaging in self-dealing. The case is filed in Tarrant County District Court.
The lawsuit states, “Defendants intentionally misled and lied to Plaintiffs to secure their multi-million-dollar investment so that Defendants could personally enrich themselves and Imperium.”
The plaintiffs, including more than a dozen investors in Rhodium, claim that material facts about their investments and Rhodium’s business operations were intentionally withheld. Most prominently, the lawsuit alleges the defendants failed to disclose the pending sale of Rhodium’s operational facilities to a direct competitor, Riot Blockchain, a transaction that created a direct conflict over key power contracts.
The lawsuit alleges, “Had Plaintiffs been made aware that they were investing millions of dollars in a startup with limited capital (Rhodium) that was pitted against an industry behemoth with over $1 billion in cash reserves (Riot) in a fight over the very power contracts that were being touted by Defendants as worth hundreds of millions of dollars and the security for Plaintiffs’ investment, Plaintiffs never would have invested in the first place.”
In addition, according to the lawsuit, the deceptive scheme expanded to inflate future growth projections for Rhodium, falsely promising substantial upside for the investors from the expansion of operations.
The complaint follows Rhodium Enterprises filing Chapter 11 bankruptcy in the Southern District of Texas in August. The bankruptcy includes six subsidiaries of the company, including Rhodium Encore and Rhodium 2.0.
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.
About Iacuone McAllister Potter PLLC
Iacuone McAllister Potter PLLC, is a Dallas-based trial firm which brings a results-driven approach to complex business disputes, high-stakes litigation, and FINRA litigation. With multi-million-dollar recoveries and a commitment to excellence, IMcP delivers trusted legal representation that is tested by experience and respected by peers. Learn more at www.imcplaw.com.
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