German investigators conducted extensive raids at the premises of Northern Data AG, which is partially owned by the issuer of the stablecoin Tether. The reason for this was an investigation initiated by the Swedish prosecutor’s office regarding potential tax manipulations in the field of Bitcoin mining.
This is reported by Finway
International Investigation and Fraud Suspicions
According to sources familiar with the situation, the checks covered the Northern Data office in Frankfurt and pertain to the company’s activities in Sweden. Recently, the tax on cryptocurrency mining was increased there. The European Public Prosecutor’s Office (EPPO) confirmed that simultaneous investigative actions took place in Sweden and Germany, with local tax and economic authorities leading the investigation.
The Swedish prosecutor’s office reported the arrest of four individuals suspected of large-scale value-added tax (VAT) fraud. The estimated damage from these actions exceeds €100 million. The investigation is examining the possibility that the company submitted false or incomplete information to obtain tax benefits.
Company and Market Reactions
Northern Data expressed surprise at the actions of law enforcement and insists that the situation arose from a misinterpretation of the tax regime. The company emphasized that its GPU rental service is intended solely for cloud computing, and traditional crypto operations are conducted in accordance with current legislation.
“Northern Data believes there is a misunderstanding regarding the taxation of its GPU offerings, which are intended exclusively for cloud computing, as well as the economic and legal structure of the company’s traditional cryptocurrency mining operations,” the company stated.
Representatives of Tether emphasized that they do not participate in the management of Northern Data and were not informed about the inspections. Meanwhile, the company announced the launch of its own internal investigation to assess potential risks.
Following the news of the raids, Northern Data’s shares plummeted sharply – the value of the securities dropped by more than 10%, and at the time of publication, they were trading at €17.
It is worth noting that as early as 2024, former top executives of the company publicly accused Northern Data of fraud and tax evasion, claiming that investors were misled about the company’s actual financial condition. Additionally, in October of last year, information emerged about plans to sell Northern Data’s mining business and focus on the development of artificial intelligence.