What happened

Shares of CleanSpark (CLSK -3.33%) started rising late yesterday and continued rising Friday morning after management issued a press release in response to a short report from Culper Research. Management refuted the claims of the report and hinted at legal action, which was encouraging to shareholders. As of 11 a.m. EST, CleanSpark stock was up only about 5%, but it had been up 10% earlier in the session.

So what

The short report was published on Jan. 14, and since then CleanSpark stock has fallen roughly 25%. Out of respect for Culper Research, anyone interested in the content of its short report should access it on its website. But suffice it to say the report raises concerns about CleanSpark's management's integrity in reporting on its microgrid technology and bitcoin-mining operations. 

A dollar bill is folded into the shape of an upward arrow.

Image source: Getty Images.

Yesterday afternoon, CleanSpark management responded, calling the report "false" and alleging Culper Research is simply a name designed to conceal the true identity of the short seller. Management notes that whoever is behind Culper Research stands to profit from CleanSpark stock going down, which is true. The report itself acknowledges Culper's short interest in CleanSpark stock -- that's kind of the point of a short report in the first place.

CleanSpark management said it had a law firm looking into this matter.

Now what

Of course, the short report from Culper Research isn't all that's going on with CleanSpark. Bitcoin continues to swing up and down. And this affects CleanSpark because the bulk of its revenue now comes from mining bitcoin. But the price of bitcoin is something outside of management's control. By contrast, refuting the claims of Culper Research is something management can do, and it will be interesting to see what else it can do to restore any lost investor confidence in the days to come.