Z Squared, a public company that got Dogecoin mining rigs from a fund advertising 28% annual returns for investors, is facing SEC enforcement actions, a new seven-figure lawsuit from retirees, and a stock price down 76% over the past year.
Reitrees Paula and Stephen Darby, both 77 years old, sued Broad Street Global Management, LLC, BroadStreet, Inc, Steven Baldassarra, and Joseph Baldassarra in Miami federal court on September 4, and the court issued summons yesterday.
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.”
All-time chart of Z Squared. Source: TradingView
Anyone can make allegations in a civil lawsuit, which aren’t necessarily indicative of wrongdoing. Readers of a legal complaint shouldn’t interpret initial claims by plaintiffs seeking money as accurate nor probable.
The Broad Street Global Fund allegedly transferred investment interest from some of its investors into a Nasdaq-listed Dogecoin miner, Z Squared, whose ZSQR common stock has declined 76% over the past 12 months.
The Darbys’ complaint asks a judge to appoint a receiver over Broad Street Global Fund. It also seeks dissolution of the fund’s assets.
Among those assets sits a strange relic of the 2021 bull market — a year when $BTC first rallied to $60,000, and Dogecoin first rallied to $0.73.
Today, for context, Dogecoin trades below $0.09.
The SEC steps in
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, a 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 outrageous, 28% annual returns.
A court-appointed monitor has overseen the company since April 2025, a few months after the SEC enforcement action.
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$660 million of Dogecoin rigs that mine at a loss
With ongoing proceedings of the SEC case swept into the past, the mining arm worked to go public anyway. In April 2026, a blank check holding company merger brought the fleet of Dogecoin miners into the publicly-traded Z Squared.
Common shares of the combined company traded on Nasdaq under the symbol ZSQR.
Its 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 the closing, and handed 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, even though that number assumed 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 are less romantic. 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 simply generate that revenue, and the filing admited, “Our direct mining costs exceeded our mining revenue before giving effect to depreciation of our mining fleet.”
Its quarterly net loss was $13.8 million.
In other words, the company’s “$660 million” fleet of crypto miners generated money-losing revenue.
The Darbys want their cash
Broad Street’s November 2025 redemption notice offered investors two options for a payout: cash within 180 days, or stock of a Cayman acquisition company.
The Darbys chose cash. It was due on May 27, 2026.
With the deadline five days out, according to the Darbys, Broad Street changed their selection to the Cayman company’s stock. The Darbys are suing to get their cash.
Z Squared has since discovered artificial intelligence. On Wednesday it 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.”
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.”