- Former executives have claimed dismissal for raising concerns about alleged fraud by Northern Data’s CEO and COO
- Joshua Porter and Gulsen Kama have filed a complaint in the California Central District Court
- Northern Data has denied the accusations and has pledged to defend its reputation vigorously
Two former executives of Northern Data, a German-listed company specializing in crypto and AI infrastructure, have claimed they were dismissed for raising concerns about alleged fraudulent activities by its chief executive and chief operating officer. The allegations were made by Joshua Porter and Gulsen Kama in a complaint filed last month in the California Central District Court following their dismissal from the company last year. Northern Data has denied the claims, saying it will fight the accusations in order to protect its reputation.
Former Execs Accuse Northern Data of Tax Evasion
Porter, who served as the chief operating officer of Northern Data’s US subsidiary before being promoted to president and CEO for North America, claims he was terminated in March 2023 after voicing concerns about the company’s financial health. According to the court complaint dated June 21, 2024, Porter discovered that Northern Data had substantial liabilities and a worrying cash flow situation:
Plaintiff Porter was shocked to learn that the company had a $30M German tax liability and additional liabilities of almost $8M while simultaneously having only $17M cash on the balance and a monthly burn rate of $3M-$4M.
Gulsen Kama, meanwhile, was the company’s North America chief financial officer. She later became the group deputy CFO, but also faced dismissal after she allegedly exposed financial misrepresentations. Kama’s complaints about the company’s accounting practices and potential securities fraud were reportedly ignored by senior executives, with the former financial chief claiming her efforts to prevent fraudulent financial reporting led to her illegal termination in June 2023.
According to the lawsuit, Porter and Kama allege that Northern Data has been “falsely misrepresenting the strength of its financial condition to investors, regulators, and business partners” and “knowingly committing tax evasion to the tune of potentially tens of millions of dollars.”
Northern Data Denies Any Wrongdoing
In a statement, Northern Data strongly denied these accusations:
It is no coincidence that these allegations from disgruntled former employees are being publicized just days after unconfirmed media speculation that the company is evaluating a potential capital markets event. The allegations are clearly financially motivated and completely baseless. We will contest them vigorously.
Integrity is paramount to Northern Data and its leadership. As a publicly listed company we have comprehensive policies and procedures to ensure the accuracy and credibility of our financial reporting. Our 2022 accounts received an unqualified audit opinion, and we will release our 2023 audited financials as scheduled. We are well capitalized and have a very robust growth plan, with revenue expected to more than triple in 2024 – a clear demonstration of Northern Data’s stability and strong investment strategy.
Northern Data has a complex history, having evolved from a crypto miner, Northern Bitcoin, to a high-performance computing data center operator. Tether, which owns 51% of Northern Data, became a major shareholder through a strategic investment involving Nvidia GPUs in March. Tether’s CEO Paolo Ardoino said at the time that Northern Data was “known for resilient and high-performance technologies.”
The company has also recently changed its auditor to Liebhart & Kollegen, a Stuttgart-based firm, after its previous auditor, KPMG, expressed concerns about Northern Data’s liquidity. KPMG’s audit report on the company’s 2022 financials flagged “material uncertainty about the group’s ability to continue as a going concern.”
As legal proceedings continue, Northern Data remains under scrutiny, with its 2023 audited financials expected to be released soon. Meanwhile, the former executives’ allegations add another layer of complexity to the company’s already challenging situation.
