By Reed R. Kathrein

The Cost of Make-Believe

If you are a corporate executive in the 2020s, a very reliable way to make your stock price go up is to announce that you are building a massive AI data center. The market loves AI data centers. The problem with building a 300-megawatt data center, however, is that it requires land, billions of dollars in capital, and a staggering amount of electricity. The shortcut is to simply announce that you are building one, watch the valuation rise, and figure out the pesky laws of physics later.

In corporate America, it is perfectly legal to have a terrible business model, operational disasters, or a product that nobody wants. You are allowed to fail. What you are not allowed to do is lie to your shareholders and pretend everything is fine. But executives often do, because the expected mathematical value of lying is highly positive in the short term. The stock goes up, bonuses vest, and the lie floats—right up until private litigators demand the receipts.

The Mechanics of the Mirage

Innventure, Inc. (NASDAQ: INV) is a self-described industrial technology commercialization company. Its primary value driver is a subsidiary called Accelsius, which develops liquid cooling technology for data centers.

In November 2025, Innventure announced that Accelsius had signed a landmark agreement with a company called DarkNX to deploy liquid cooling across a new 300MW AI data center campus in Ontario, Canada. Innventure touted this as the largest direct-to-chip deployment to date, projecting that this deal would push Accelsius to become cash flow positive by the end of 2026, with an implied $100 million annual revenue run rate.

There was just one minor issue with the 300MW DarkNX data center campus: it appears to have existed entirely in the realm of imagination.

According to a short seller report by Morpheus Research, DarkNX was incorporated just 12 months prior out of a single-family suburban home in Toronto. On its website, DarkNX claimed to have 998 GW of "available data center development capacity," which would require about 3/4 of the entire power capacity of the United States. To support its physical existence, DarkNX's Google Maps profile featured a photo of a futuristic server farm with a hastily photoshopped logo in the background.

The actual address listed for this data center? A single-tenant commercial building occupied by a trucking company, where the founder of DarkNX had briefly worked as a manager nearly eight years prior.

But the fiction served a highly lucrative internal purpose. As the company later announced on August 19, 2026, senior management and directors had actually received earnout shares based on the Accelsius purchase order from DarkNX. The Board eventually had to force a "Management and director earnout share forfeiture," noting that while the shares were technically issued properly based on 2023 contractual milestones, the "subsequent removal of the DarkNX booking" meant they had to give them back. It is a brilliant piece of corporate plumbing: book a fake revenue milestone with a shell company, vest your earnout shares, and hope nobody checks Google Street View.

The Texts

Securities fraud is fundamentally a literary genre. People committing it simply cannot resist writing down their internal skepticism. When management tells the market they have a funded, vertically-integrated data center developer as a flagship client, you can usually count on the actual employees to document the absurdity.

According to former Accelsius employees quoted in the complaint, the internal view of the DarkNX deal was less than enthusiastic:

"Just look at who DarkNX is. 5 guys and a dog. If you look at their office in Mississauga... The data center was at a trucking terminal or something like that. It's just, it's just not a real company."

Another former employee noted the basic mechanical problems with the narrative:

"I think, you know, we've never heard of the company, they don't have customers, there's no data center... So there's just a lot of obvious, missing pieces it feels like."

By August 2026, Innventure was forced to walk it all back. In its Q2 2026 Form 10-Q, the company quietly suspended its $100 million revenue target and disclosed that "the deployment site identified in the DarkNX purchase order is no longer available". The market, suddenly realizing that 5 guys and a dog in a trucking terminal do not usually buy $100 million worth of liquid cooling equipment, sent Innventure's stock plummeting 55% to $1.62 per share.

The Enforcement Deficit

This is exactly why private securities litigation exists. The SEC is a perpetually understaffed, underfunded agency drowning in a daily avalanche of corporate filings. If we wait for regulatory agencies to uncover that a "funded digital infrastructure company" is actually a shell corporation operating out of a residential home with a photoshopped Google page, the damage is already done. Without the Fear Of Lawsuit (FOLS), corporate boards have near-zero economic incentive to rein in executive hallucinations. FOLS is the market's primary mechanism for enforcing reality and correcting the spread between truth and price.

If You Bought the Float

If you happened to purchase $INV securities during the period when management claimed to be building out a massive AI data center campus in a Canadian trucking terminal, and you are interested in seeing the bill for that discrepancy, our litigation team at Hagens Berman is reviewing the paper trail.

• Case Hub: hbsslaw.com/INV
• Email: [email protected]