Masatoshi Kumagai’s GMO Internet Group, Inc. (TSE: 9449) is in a legal battle with RIOT Platforms, Inc.’s (Nasdaq: RIOT) Whinstone over a U.S. mining facility. GMO blames Whinstone for a recent failure and argues that Mr. Kumagai, as an executive, should not be deposed, but the judge disagrees. Mr. Kumagai is scheduled for deposition in Hawaii soon.
GMO Internet, with dozens of subsidiaries, has faced losses in Bitcoin mining. The company sold stakes in subsidiaries in 2018 to cover cash damages from failures. Trouble at GMO’s Swiss office led to $320 million in losses in cryptocurrency mining in one year. Corporate governance experts find the conglomerate’s complex structure problematic.
Bitcoin mining requires top-notch equipment, maintenance, and expertise for success. GMO Internet has struggled to make profits in the industry, with the latest issue involving a mining facility provided by Whinstone. Whinstone argues that GMO’s lack of investment in maintenance led to the failure. The court has ordered Mr. Kumagai’s deposition for this week in Hawaii.
The court has ruled against GMO’s attempt to prevent Mr. Kumagai’s deposition, citing his personal knowledge of the case. Experts believe the judge’s decision is clear and that Mr. Kumagai’s deposition is crucial for the case. The “apex doctrine” to protect senior executives from depositions may not apply in this situation, according to legal experts.
GMO Internet has faced multiple setbacks in crypto ventures, including losses in stablecoin and Bitcoin mining operations. The company temporarily lost its stablecoin peg, leading to investor losses and class action suits. The failure in Bitcoin mining in Europe in 2018 resulted in significant losses for the company. GMO Internet experiences an extraordinary loss due to the inability to recover carrying amounts of in-house-mining-related business assets. To raise cash, the company sold shares in two listed subsidiaries, GMO Financial Holdings and GMO Payment Gateway. Complex corporate structures could pose potential problems, according to Professor Elson.
Japan’s GMO Internet CEO Kumagai faces a Hawaii deposition following the company’s latest crypto failure. The CEO’s deposition in Hawaii comes after the company’s decision to record an extraordinary loss due to challenges in the business environment. The company raised cash by selling shares in two listed subsidiaries.
Read more at Yahoo Finance: Japan’s GMO Internet CEO Kumagai Faces Hawaii Deposition After Latest Crypto Failure