Bitfarms Faces Class Action Lawsuit Over Financial Reporting Deficiencies

A class action lawsuit was filed against Bitfarms Ltd. (BITF) by Levi & Korsinsky on May 9, 2025. The plaintiffs, who are shareholders, allege that they purchased BITF stock at artificially inflated prices between March 21, 2023, and December 9, 2024, and are now seeking compensation for their financial losses. Investors who bought Bitfarms stock during that period are encouraged to learn about joining the lawsuit.

Bitfarms is a Canadian Bitcoin mining company that is in the process of transitioning its focus to building and managing data center infrastructure for high-performance computing (HPC) and artificial intelligence (AI) projects. The company claims to use renewable and alternative power sources for its operations to optimize costs and enhance sustainability. The lawsuit centers around the company’s failure to inform investors about its deficient internal controls over financial reporting.

According to the lawsuit, Bitfarms and three of its current and/or former senior officers repeatedly made false and misleading public statements throughout the Class Period. They are accused of omitting truthful information about the efficacy of the company’s internal controls over financial reporting and related issues from SEC filings and related material. During the Class Period, the company repeatedly stated that its management, including the CEO and CFO, had assessed the effectiveness of the company’s internal control over financial reporting and found them to be effective as of December 31, 2022.

In a May 15, 2023 press release, the former CEO noted that the company was maintaining financial and operating discipline and was able to achieve its target of reaching 6.0 exahash per second (EH/s) in Q3 FY23, ahead of the previously projected Q4 FY24. Additionally, in an August 8, 2023 press release, the company mentioned that its management, led by the CEO and CFO, had established internal controls over financial reporting (ICFR). These controls were meant to help ensure that the company’s financial reports are reliable, that its financial statements are prepared correctly for external purposes, and that they are in accordance with IFRS rules.

However, subsequent events reveal that the defendants failed to implement adequate internal controls over financial reporting, which ultimately led to the restatement of their historical financial statements. The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the business practices and prospects during the Class Period. Importantly, the defendants are accused of misleading investors about deficient internal controls and procedures related to the categorization of proceeds derived from the sale of digital assets as cash flows from operating activities rather than from investing activities.

The information became clear on December 9, 2024, when the company issued a press release announcing that it would need to restate previously issued financial statements due to the above-mentioned erroneous reporting. Particularly, Bitfarms will have to restate its consolidated financial statements for the fiscal years ending December 31, 2023 and 2022 and the related management’s discussion and analysis (MD&A) for the year ended December 31, 2023. Additionally, the company will need to restate unaudited interim condensed consolidated financial statements for the three and nine months ended September 30, 2024 and 2023 and the related MD&A for the three and nine months ended September 30, 2024. These restatements were required to correct “a material error in the classification of proceeds derived from the sale of digital assets.”

To conclude, the company misled investors regarding the potential impact on its financial results from the incorrect classification of proceeds from the sale of digital assets under cash flow from operating activities. Owing to these issues, in the past year, causing massive damage to shareholder returns. The lawsuit highlights the importance of transparency and accurate financial reporting in maintaining investor trust and confidence in a company's operations and prospects.