European bitcoin mining company Northern Data is responding to a whistleblower lawsuit filed by two former company executives who claim they were unfairly fired after raising concerns about the company’s financial health and alleging tax evasion.

On Monday night, Northern Data attorneys filed a motion to dismiss the federal case, calling it a “textbook example of bad-faith litigation” and claiming that the two plaintiffs — Gulsen Kama and Joshua Porter — had “brief, unproductive periods at the company,” after which Kama was terminated for cause and Porter was fired for his “lack of productivity.”

“When Porter and Kama made extortionate demands for ‘severance’ payments, Northern Data rejected them,” Northern Data’s attorneys wrote in the motion to dismiss. “In response, both employees now call themselves ‘whistleblowers’ and seek to profit personally and financially from allegations they know—and have every reason to know—are false.”

Monday’s filing also noted that Kama’s lawsuit against Northern Data is not her first round of litigation against her former employers. In 2019, she filed a whistleblower lawsuit against tax preparer Jackson Hewitt, alleging she was wrongfully fired after raising concerns that the company lied about a potential relocation to get a job. $2.7 million tax reduction of New Jersey. Last year, Kama filed a lawsuit against another employer, Quest Diagnostics, alleging workplace discrimination based on her gender and ethnicity. The outcome of those lawsuits was not immediately clear.

An attorney for Kama and Porter did not respond to CoinDesk’s request for comment.

Northern Data’s motion to dismiss is largely procedural in nature, arguing that the California court overseeing the case should dismiss it due to its lack of jurisdiction over the corporate defendants (in this case, the German tech company’s U.S. subsidiaries), which are incorporated in Delaware and have principal places of business in Virginia. The lawyers also argue that the fraud allegations — which they describe as “inflammatory but completely unsupported” — lack sufficient particularity.

A hearing to discuss the motion to dismiss will be held in a Los Angeles court on August 19, 2024 at 1:30 p.m. local time (20:30 UTC).

Kama and Porter’s first amended complaint against their former employer contained explosive allegations that Northern Data lied to investors about the strength of its finances, concealed the fact that it was “nearly insolvent” and was “knowingly committing tax evasion worth potentially tens of millions of dollars.”

The allegations come amid growing media buzz that the Tether-backed tech company is considering a U.S. initial public offering (IPO) of its artificial intelligence unit, which Bloomberg reported was valued at up to US$16 billion.

In their Monday motion, Northern Data’s lawyers declined to comment on market speculation but stressed that if it were true, “the run-up to an IPO is a particularly sensitive time for a company. As plaintiffs are no doubt aware, public accusations of fraud — no matter how irresponsible — can disrupt that process.”

Porter and Kama claimed that the company had a “$30 [million] German tax liability and additional liabilities of almost $8 [million] while simultaneously having only $17 [million] money on balance and a monthly burn rate of $3 [million]-$4 [million].” The lawsuit also alleges that the company engaged in “rampant tax evasion” in its early years and had no plans to take corrective steps to explain it, which would leave it potentially liable for “tens of millions of dollars” in U.S. tax liabilities if it were audited.

Both Kama and Porter claimed they were fired after raising their concerns with supervisors.

A Northern Data spokesperson said the company “refutes the allegations in the strongest terms.”

“It is no coincidence that these allegations from disgruntled former employees have come just days after unconfirmed media speculation that the company is considering a potential capital markets event and shortly before the publication of our 2023 accounts. The allegations are clearly financially motivated and completely unfounded. We will vigorously contest them to protect ourselves against false claims that harm our company and our business.”

The spokesperson added that the company is “well capitalized” and has a “very robust growth plan, with revenue expected to more than triple by 2024.”

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