Apollo Power (TASE: APLP) is now facing a lawsuit submitted by the Tel Aviv District Court this week. The solar energy tech company will have to defend itself against allegations of misleading investors by falsely reporting. On December 18, the company’s share price increased by 150% after announcing it had entered the crypto mining business.
The company’s chairman, CEO and directors are all accused of tricking investors by submitting an immediate report to the TASE that was missing important details in regards to its new relationship with blockchain technology.
On December 18th, Apollo Power shared a huge public announcement discussing an experimental project in mining cryptocurrencies using its system. Investors were misled by the announcement, believing that the system was a breakthrough that could reduce electricity costs for miners, therefore making the system more valuable.
Following the announcement, Apollo’s stock price shot up in value, because many investors considered the announcement to be credible and purchased the stock. Unfortunately, a mere six hours later, Apollo shared a second report making it clear, according to the class action application, that the first announcement was, “partial, false, misleading, fake, fraudulent and at the very least negligent.”
It appears that the first report issued by Apollo was missing significant information, and the Israel Securities Authority forced the company to re-issue a new statement, revealing the missing details. Many accusers report that the company attempted to use popular keywords, such as, “Bitcoin,” to draw the attention of investors. The ISA has already begun to investigate this incident on its own as well.
The latter announcement that was revealed later that day, on December 18, explained that the company’s half hour long experiment only managed to produce .000054 ETH, equaling a total value of 4 cents. It went on to share that the system could only mine around 35 cents worth of altcoins per day, and no Bitcoins. To top it off, the company stated that the full costs for mining with the system were still unknown, despite the original statement claiming that users could use the system as a substantial extra income source. The investors who first purchased the stock after the initial report was released are the ones being represented by the lawsuit, claiming the company’s fraudulent reporting caused them to lose money.
With so many companies scrambling to include themselves in the cyrptocurrency and blockchain wave, it’s becoming harder and harder to know which companies are legit. It’s important to proceed with caution when it comes to investing in any of these businesses.