Hut 8 (HUT) Stock Drops 5% After $2.35M Settlement Over Bitcoin Merger Claims

TLDR

• Hut 8 agreed to pay $2.35 million to settle a securities class action tied to its 2023 merger with U.S. Bitcoin Corp.
• Investors alleged Hut 8 failed to disclose energy and internet issues at King Mountain, a Texas bitcoin mining joint venture.
• A January 2024 short-seller report from J Capital Research triggered a 23% single-day drop in HUT stock.
• The $2.35 million represents ~19.6% of estimated maximum recoverable damages of $12.08 million.
• Hut 8 denied any wrongdoing; the settlement still needs court approval from Judge Victor Marrero.

Hut 8 (HUT) has agreed to pay $2.35 million to settle a securities class action lawsuit tied to its 2023 all-stock merger with U.S. Bitcoin Corp. (USBTC). HUT stock fell roughly 5% in pre-market trading Tuesday following the news.

Hut 8 Corp., HUT

The lawsuit was filed in the U.S. District Court for the Southern District of New York. It covers investors who bought or acquired Hut 8 securities between February 13, 2023, and January 18, 2024.

The merger between Hut 8 and USBTC was first announced in February 2023 and closed in November of that year. It created the current Hut 8 Corp., which has since shifted its focus to AI data centers and high-performance computing.

Investors alleged Hut 8 misled the market by overstating the deal’s benefits. The core complaint was that the company failed to disclose persistent energy curtailment and internet connectivity problems at King Mountain, a Texas bitcoin mining joint venture where USBTC held a 50% stake.

They also claimed Hut 8 misrepresented USBTC’s overall financial condition going into the merger.

The Short-Seller Report That Sparked the Slide

The case gained real traction on January 18, 2024 — the same day Hut 8 rang the Nasdaq opening bell. Short seller J Capital Research published a critical report that day, challenging the company’s statements about the USBTC deal and raising concerns about King Mountain’s operations.

HUT stock dropped more than 23% that day. Hut 8 called the report a deliberate attempt to spread misinformation.

The lawsuit that followed was wide-ranging, but the court trimmed it down over time. In September 2025, Judge Victor Marrero dismissed the Exchange Act claims entirely. He also rejected Securities Act claims related to USBTC’s financial condition before the merger.

What survived were Securities Act claims around alleged omissions at King Mountain — specifically, whether Hut 8’s merger materials adequately flagged infrastructure risks at a facility that was material to USBTC’s mining operations.

Settlement Terms and What Comes Next

With a narrower case still ahead, Hut 8 indicated it would push for judgment on the pleadings. The company argued that registered and unregistered stock had been mixed together after the merger, making it hard for aftermarket buyers to trace their holdings back to the registration statement.

Plaintiff counsel said that risk, combined with the cost of continued litigation, made accepting the settlement the right call.

The $2.35 million figure equals roughly 19.6% of the estimated maximum recoverable damages of $12.08 million. According to Cornerstone Research data cited in the filing, that recovery rate beats the 12.9% median and 14.6% average for Securities Act-only settlements in 2025.

Hut 8 denied any wrongdoing or liability as part of the agreement. The settlement still requires preliminary and final approval from Judge Marrero before it becomes final.

Despite the lawsuit, HUT stock has gained more than 640% over the past year.

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