Retirees sue public Dogecoin miner Z Squared's fund backer

A public company that sourced Dogecoin mining hardware from a fund marketing 28% yearly returns, Z Squared, now faces SEC enforcement proceedings, a seven-figure lawsuit from retired investors, and a stock price that has tumbled 76% in the last year.

Paula and Stephen Darby, both aged 77, filed a lawsuit against Broad Street Global Management, LLC, BroadStreet, Inc, Steven Baldassarra, and Joseph Baldassarra in a Miami federal court on September 4. The court issued summons the following day.

The Darbys claim the Baldassarras "are trying to steal over half a billion dollars from their own investors, including the Darbys' approximate $1,415,373."

Any individual can make accusations in a civil suit, and those allegations do not necessarily point to misconduct. Readers of a legal complaint should not treat initial claims from plaintiffs seeking damages as accurate or likely.

According to the suit, the Broad Street Global Fund allegedly shifted investment stakes from some of its investors into Z Squared, a Nasdaq-listed Dogecoin miner. ZSQR common shares have dropped 76% across the last 12 months.

The Darbys' complaint requests that a judge appoint a receiver for the Broad Street Global Fund and seeks dissolution of the fund's holdings.

Among those holdings sits an odd survival from the 2021 bull market — a year when bitcoin first touched $60,000 and Dogecoin first hit $0.73.

By way of comparison, Dogecoin now trades below $0.09.

The SEC steps in

In January 2025, the SEC sued Broad Street and its managers, claiming the group gathered more than $1 billion from over 1,000 investors. The Broad Street name references the prestige of a New York financial district street but has no connection to it.

Investor funds were supposed to finance hotels, custom home construction and a South Carolina lagoon resort offering "perpetual income at rates of return never seen before."

Worryingly, Broad Street's crypto mining division received roughly $199 million after promising extraordinary 28% annual returns.

A court-appointed monitor has supervised 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

As the SEC case proceedings continue in the background, the mining division still pressed ahead with going public. In April 2026, a blank-check holding company merger brought the Dogecoin miner fleet into the publicly traded Z Squared.

The combined entity's common shares began trading on Nasdaq under the ticker ZSQR.

Its CEO, David Halabu, had been working with Broad Street since late 2021.

Broad Street came away with 41.5 million shares, roughly 81% of the company at closing, and distributed them to its members.

The merger carried an ambitious valuation. A valuation firm assigned the 9,800-machine fleet a $660 million value, though that figure presumed every machine was a top-tier Bitmain L9 operating on Dogecoin.

In reality, 8,228 of the machines were lower-grade L7 units.

Z Squared's own accounts tell a different story. The machines were booked at $12.4 million and had a net value of $11.3 million at quarter end. In the second quarter of 2026, the fleet produced just $1.6 million in revenue, 88% of it from Dogecoin.

Cost of revenue was 211% of that revenue figure, and the filing acknowledged, "Our direct mining costs exceeded our mining revenue before giving effect to depreciation of our mining fleet."

Its quarterly net loss stood at $13.8 million.

Put simply, the company's "$660 million" crypto miner fleet generated revenue at a loss.

The Darbys want their cash

Broad Street's November 2025 redemption notice gave investors two payout options: cash within 180 days, or shares of a Cayman acquisition company.

The Darbys opted for cash, which was due on May 27, 2026.

Five days before that deadline, the Darbys say, Broad Street switched their election to the Cayman company's stock. The Darbys are now taking legal action to recover their cash.

Z Squared has since turned to artificial intelligence. On Wednesday it completed an all-stock acquisition 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 is still active. In the most recent quarterly filing for ZSQR investors, the company stated, "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."