Z Squared, a publicly traded company that acquired Dogecoin mining rigs from a fund advertising 28% annual returns, is contending with SEC enforcement actions, a seven-figure lawsuit from retirees, and a stock price that has fallen 76% over the past year.
Retirees Sue Broad Street Global Management
Retirees Paula and Stephen Darby, both 77 years old, filed suit against Broad Street Global Management, LLC, BroadStreet, Inc., Steven Baldassarra, and Joseph Baldassarra in Miami federal court on September 4. The court issued summonses the following day. The Darbys allege that the Baldassarras are trying to steal over half a billion dollars from their own investors, including the Darbys’ approximate $1,415,373.
Note: Anyone can make allegations in a civil lawsuit, which are not necessarily indicative of wrongdoing. Readers should not interpret initial claims by plaintiffs seeking money as accurate or probable.
SEC Enforcement Action
In January 2025, the SEC sued Broad Street and its managers, alleging the group collected more than $1 billion from over 1,000 investors. The name “Broad Street” invokes the prestige of, but is unrelated to, the financial district street in downtown New York. Investor money was supposed to fund hotels, custom home construction, and a South Carolina lagoon resort promising perpetual income at rates of return never seen before.
Disturbingly, Broad Street’s crypto mining division took in about $199 million after targeting 28% annual returns. A court-appointed monitor has overseen the company since April 2025, a few months after the SEC enforcement action.
SPAC Merger and Valuation Concerns
Despite ongoing SEC proceedings, the mining arm went public via a blank-check holding company merger in April 2026. The combined entity trades on Nasdaq under the symbol ZSQR. CEO David Halabu had worked with Broad Street since late 2021. Broad Street walked away with 41.5 million shares—about 81% of the company at closing—and distributed them to its members.
The valuation attached to that merger was ambitious. A valuation firm ascribed the 9,800-machine fleet a value of $660 million, assuming every machine was a flagship Bitmain L9 working on Dogecoin. In reality, 8,228 of the machines were lower-specification L7 units. Z Squared’s own books tell a different story: the machines came onto the books at $12.4 million and carried a net value of $11.3 million at quarter end. In the second quarter of 2026, the fleet earned just $1.6 million, 88% of it from Dogecoin. Cost of revenue ran to 211% to generate that revenue, and the filing admitted, Our direct mining costs exceeded our mining revenue before giving effect to depreciation of our mining fleet.
The quarterly net loss was $13.8 million. In other words, the company’s “$660 million” fleet of crypto miners generated money-losing revenue.
Redemption Dispute and the Darbys’ Cash Demand
Broad Street’s November 2025 redemption notice offered investors two payout options: cash within 180 days, or stock of a Cayman acquisition company. The Darbys chose cash, which was due on May 27, 2026. With the deadline five days away, according to the Darbys, Broad Street changed their selection to the Cayman company’s stock. The Darbys are now suing to recover their cash.
Pivot to AI Data Center
Z Squared has since pivoted toward artificial intelligence infrastructure. On Wednesday, the company closed an all-stock purchase of an Arkansas data center campus with eight megawatts of power. Halabu wrote to shareholders last month: I would rather earn your confidence with delivered megawatts than ask for it with words.
Ongoing SEC Proceedings and Disclosure
The SEC’s enforcement action remains ongoing. In the latest quarterly filing for ZSQR shareholders, the company disclosed: BSG Series CM, LLC, the entity from which we acquired our entire mining fleet, was our controlling stockholder immediately after the business combination and is a named defendant in SEC enforcement proceedings.
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