Nasdaq-listed cryptocurrency firm Bit Digital has filed a lawsuit in the New York Supreme Court against mining company Blockfusion, seeking to recover a $5 million investment and to halt Blockfusion's planned merger with a special purpose acquisition company (SPAC), Blue Acquisition Corp. The legal complaint alleges that Blockfusion accepted the capital infusion during a previous business arrangement, incurring a clear repayment obligation, but is now proceeding with a SPAC merger to become a publicly traded entity without addressing the outstanding debt.
Bit Digital's legal team is requesting a temporary restraining order to immediately pause the SPAC merger proceedings and a court mandate for full repayment of the $5 million plus applicable interest and legal fees. The lawsuit argues that Blockfusion's actions constitute bad faith and raise serious corporate governance questions by attempting to go public without settling prior liabilities.
The case emerges during a period of increased regulatory scrutiny for cryptocurrency companies seeking public listings via SPACs. The U.S. Securities and Exchange Commission (SEC) has been applying stricter disclosure rules to crypto SPACs since 2024. Legal experts note that the lawsuit hinges on basic corporate principles of fiduciary duty, suggesting that a $5 million debt likely qualifies as a material issue that must be addressed before a major transaction like a SPAC merger.
Bit Digital, which trades under the ticker BTBT, has strategically pivoted from its original Bitcoin mining focus to primarily emphasize Ethereum investments and related blockchain infrastructure. The $5 million sum represents a non-trivial portion of its operational capital, and recovering these funds is a material financial objective. The outcome of this case could set a precedent affecting the pace of future crypto SPAC mergers, highlighting the need for robust contractual agreements and increased due diligence in private crypto investments.
