Akerna Accused of Hiding Merger Details

The suit seeks a court order blocking the merger.

Cannabis software firm Akerna Corp. is facing a federal lawsuit brought by a shareholder aiming to halt the company’s planned merger with Bitcoin mining firm Gryphon Digital Mining Inc.

The plaintiff, Albert McCaffrey, alleges that Akerna’s leadership obscured key details about the deal, misleading investors and potentially harming shareholder interests, Law360 reported.

The lawsuit, filed in Colorado federal court on Monday, claims that Akerna’s SEC filings regarding the merger, first announced in January, were insufficient and misrepresented key aspects of the deal’s closure. According to McCaffrey’s complaint, the agreement could lead to a dilution of share value without offering any meaningful consideration to the company’s shareholders.

McCaffrey asserted that the omissions and misrepresentations in the SEC filings hindered shareholders from making fully informed decisions about the proposed transaction. He contends that the filings inadequately addressed:

  • Potential management conflicts of interest.
  • Financial projections for both companies.
  • Data used to back up these financial valuations.

The complaint also accuses Akerna’s CEO, Jessica Billingsley, and the board directors of self-serving and using nonpublic information to push the deal forward. In January, the company announced that it would acquire Gryphon and adopt its name while concurrently selling some of its cannabis-focused business units.

In response to the allegations, an Akerna spokesperson told Law360, “We believe our disclosure was timely and comprehensive, providing our shareholders with the information they need to make informed decisions.”

McCaffrey’s suit alleges two violations of the Exchange Act. It seeks a court order blocking the merger and demands that Akerna reissue complete and accurate public statements. The suit also requests compensation for costs and additional relief.

Akerna is also facing litigation woes in Pennsylvania, after Oregon-based cannabis tech company Dutchie filed suit against the company over alleged unfair business practices.

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at adam.jackson@crain.com.

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