A fund tied to Nasdaq-listed Dogecoin miner Z Squared is facing a new lawsuit from retirees while the U.S. Securities and Exchange Commission’s case against Broad Street and its managers is still underway. Protos reported that Z Squared’s stock has fallen 76% over the past 12 months.
Paula Darby, 77, and Stephen Darby, 77, sued Broad Street Global Management, LLC, BroadStreet, Inc, Steven Baldassarra, and Joseph Baldassarra in Miami federal court on September 4. The court issued summons yesterday, according to the report.
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."
Protos noted that allegations in a civil complaint do not by themselves establish wrongdoing, and that claims made by plaintiffs seeking money should not automatically be treated as accurate or likely to be proven.
The complaint targets fund assets and the transfer into Z Squared
The lawsuit says Broad Street Global Fund transferred investment interests from some investors into Z Squared, a Dogecoin miner listed on Nasdaq. Shares of the combined company trade under the ticker ZSQR.
The Darbys are asking a judge to appoint a receiver over Broad Street Global Fund. They are also seeking dissolution of the fund’s assets. Among those assets is a remnant of the 2021 bull market, the year BTC first climbed to $60,000 and Dogecoin first rose to $0.73. For context, the report says Dogecoin now trades below $0.09.
SEC enforcement began in January 2025
The SEC sued Broad Street and its managers in January 2025, alleging that the group raised more than $1 billion from over 1,000 investors.
According to the report, investor money was supposed to finance hotels, custom home construction, and a South Carolina lagoon resort that promised "perpetual income at rates of return never seen before." Broad Street’s crypto mining division separately took in about $199 million after marketing 28% annual returns.
A court-appointed monitor has overseen the company since April 2025, several months after the SEC enforcement action was filed.
A 9,800-machine Dogecoin mining fleet entered the public market at a $660 million valuation
Even as the SEC proceedings moved forward, Broad Street’s mining arm continued working toward a public listing. In April 2026, a merger with a blank-check holding company brought the Dogecoin mining fleet into publicly traded Z Squared.
Z Squared chief executive David Halabu had worked with Broad Street since late 2021. At closing, Broad Street received 41.5 million shares, representing about 81% of the company, and distributed those shares to its members.
The valuation attached to the merger was striking. A valuation firm assigned the 9,800-machine fleet a value of $660 million, but that figure assumed every machine was a flagship Bitmain L9 running on Dogecoin. In reality, 8,228 of the machines were lower-specification L7 units.
Z Squared’s own accounting paints a much smaller picture. The machines were booked at $12.4 million and carried a net value of $11.3 million at quarter end.
In the second quarter of 2026, the fleet generated just $1.6 million in revenue, with 88% of that tied to Dogecoin. Cost of revenue reached 211% simply to produce that revenue. In its filing, the company said, "Our direct mining costs exceeded our mining revenue before giving effect to depreciation of our mining fleet." Z Squared posted a quarterly net loss of $13.8 million.
Put plainly, the crypto mining fleet that was valued at $660 million produced revenue at a loss.
The Darbys say they chose cash and were switched into stock
Broad Street’s redemption notice in November 2025 gave investors two choices for a payout: cash within 180 days or shares of a Cayman acquisition company.
The Darbys chose cash. Payment was due on May 27, 2026. With five days left before the deadline, Broad Street changed their election to stock in the Cayman company, according to the complaint. The couple is suing to recover cash.
Z Squared moves into AI-linked infrastructure while the SEC case remains open
Since then, Z Squared has moved toward artificial intelligence infrastructure. On Wednesday, the company closed an all-stock acquisition of a data center campus in Arkansas 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 enforcement action is still ongoing. In its latest quarterly filing, Z Squared told ZSQR shareholders: "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."