Rhodium Enterprises Faces Fraud Allegations From Investors

According to BlockBeats, a group of investors has filed a class-action lawsuit against the founder of Texas-based Bitcoin mining company Rhodium Enterprises, alleging fraudulent activities. The lawsuit, initiated by attorneys from Iacuone McAllister Potter, accuses the defendants, including Rhodium executives and Fort Worth-based Imperium Investments Holdings, LLC, of misleading the plaintiffs by concealing critical information and engaging in self-dealing transactions. The plaintiffs claim they were misled into investing a total of $33 million, with the lawsuit filed in Tarrant County District Court. The legal action asserts that the defendants intentionally deceived the plaintiffs to secure millions of dollars in investments, allegedly for personal enrichment and to benefit Imperium. The plaintiffs, comprising over a dozen investors in Rhodium, allege that significant facts regarding their investments and Rhodium's business operations were deliberately withheld. A key accusation is that the defendants failed to disclose an impending transaction to sell Rhodium's operational facilities to direct competitor Riot Blockchain, which reportedly led to a conflict over critical power contracts. This lawsuit follows previous reports from August, where Rhodium Enterprises filed for voluntary bankruptcy under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas, revealing debts of up to $100 million. The bankruptcy filing, submitted on August 24, included six subsidiaries: Rhodium Encore, Jordan HPC, Rhodium JV, Rhodium 2.0, Rhodium 10MW, and Rhodium 30MW. The documents indicated that the company's debts ranged between $50 million and $100 million, while its total assets were estimated to be between $100 million and $500 million. This financial disclosure has added another layer of complexity to the ongoing legal challenges faced by Rhodium Enterprises, as the company navigates both bankruptcy proceedings and the newly filed lawsuit alleging fraudulent conduct.