As we have noted on this site, the increasing number of AI-related corporate and securities lawsuit filings is one of the most important recent developments in the world of D&O liability and insurance. Among the AI lawsuits is a particular category of claims involving allegations against AI infrastructure companies. By way of example, last week, two AI infrastructure companies were hit with securities suits alleging that the companies overstated their business opportunities arising from providing infrastructure to support the burgeoning AI build-out. As discussed further below, these AI infrastructure lawsuits represent their own category of AI-related suit filings.
Innventure Inc.
Innventure is an industrial technology company. Through its Accelsius Holdings subsidiary, the company is developing and commercializing cooling solutions for data centers and other high-performance computing environments. It calls its cooling product “NeuCool.”
On November 17, 2025, Inventure announced that Accelsius had entered into an agreement with DarkNX, an alleged global data center developer, to deploy the NeuCool technology across a new data center campus in Ontario, Canada, which the company said signaled a “shift toward large-scale industry adoption of next-generation cooling.”
On May 28, 2026, short-seller Morpheus Research published a report alleging that the DarkNX’s venture to build a new AI data center in Ontario was a “fabrication.” Among other things, the report said that there is “zero evidence that this project exists or that DarkNX has the team or even funding to even contemplate such a project.” The report quoted an alleged former Innventure employee as saying that management was using “false information” and revenue projections that were “pure fiction” to solicit investments in Accelsius. The complaint alleges that the company’s share price declined on this news.
On August 13, 2026, as part of its second quarter 2026 financial reporting, the company announced that it was suspending its prior revenue and cash flow targets for 2026 for Accelsius and shifting its focus. The company also said that “the deployment site identified in the DarkNX purchase order is no longer available. Accelsius has removed the DarkNX project from its internal bookings.” According to the complaint, the company’s share price fell a further 55% on this news.
The complaint alleges that the defendants failed to disclose to investors that “Accelsius’ alleged transformative deal with DarkNX was unlikely to come to fruition as no evidence of DarkNX constructing or facilitating a large-scale AI data center existed” and that as a result, the company’s stated revenue and cash flow targets for Accelsius were overstated. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint seeks to recover damages on behalf of the class.
Hyliion Holdings
Hyliion develops modular power plant technology. On May 12, 2026, Hyliion announced that it had established a “strategic partnership” with VFG Holdings, an alleged AI data center developer, in which Hyliion would deploy power modules for data center applications. In announcing this partnership, Hyliion said, among other things, that VFG is “comprised of industry veterans from some of the largest data center companies” and is “planning multiple gigwatts of power production in the years ahead.”
The complaint alleges that Hyliion’s stock price rose on the news of the VFG partnership. The complaint alleges further that individual corporate officers, using Rule 10b5-1 trading plans, sold their company shares in transactions timed to follow the VFG announcement in order to “reap unjust financial rewards.”
On June 23, 2026, short-seller Pelican Way Research published a report that raised red flags regarding VFG’s operational capabilities, financial resources, and development experience. Specifically, the report raised the concern that VFG was a new entity with an incomplete website and apparently only four employees. The report also claimed that VFG lacked the resources to raise the hundreds of millions of dollars needed to pay Hyliion and questioned whether VFG engaged in any meaningful business activity. The report suggested that the announcement of the VFG partnership was conveniently timed, just as Hyliion’s cash resources were dwindling.
On August 26, 2026, two separate securities class action lawsuit complaints were filed in the Western District of Texas against Hyliion and certain of its directors and officers. The two complaints can be found here and here. Both complaints purport to represent a class of investors who purchased Hyliion securities between May 12, 2026, and June 23, 2026.
The complaints allege that during the class period, and “in order to cause a rapid price appreciation in Hyliion stock,” the defendants announced a deal “with an entity that was very recently formed and does not appear to have any actual business operations” and that the individual defendants timed the announcement in order to “insider trade.” The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks to recover damages on behalf of the class.
Discussion
Many readers undoubtedly will be familiar with “AI washing,” which involves allegations that a company overstated its artificial intelligence capabilities or opportunities. At first glance, it might appear that these new lawsuits should be categorized as AI washing cases. The companies certainly have been alleged to have overstated their respective opportunities.
However, these cases do not exactly fit the classic AI washing mold. These companies are not alleged to have overstated their artificial intelligence capabilities or opportunities. Indeed, the defendant companies are not alleged to have made any artificial intelligence-related misrepresentations, as such. Instead, the companies are alleged to have overstated the extent to which they were in a position to profit from the AI build-out, by offering AI infrastructure development, products, or services.
The fact is that the AI industry is in the midst of a massive buildout, in which large tech companies have announced AI development plans that run into the hundreds of billions of dollars. There is no doubt that there are going to be many infrastructure development and supply companies that will ride this build-out to capture massive revenues. Given the extent of the current boom, it is no surprise that infrastructure companies want to position themselves to take advantage of the boom – or, at a minimum, to create the appearance that they are positioned to take advantage of the boom.
Because the AI infrastructure lawsuits differ in key respects from the classic AI washing pattern of allegations, it is our view that the AI infrastructure lawsuits represent their own category of AI-related litigation, as differentiated from the AI washing suits.
Even before the filing of these latest lawsuits, there had already been a number of AI infrastructure lawsuits filed this year, including the lawsuits filed against Power Solutions International (discussed here), Fermi (discussed here), and Coreweave (discussed here). Given the sheer size of the AI buildout and the amount of economic activity involved, it seems likely that there will be further AI infrastructure lawsuits filed in the weeks and months ahead.
In any event, according to our tally, the filing of these new lawsuits brings the total number of AI-related lawsuit filings this year to 22 (counting the two similar complaints against Hyliion only once), by comparison to only 16 AI-related lawsuit filings in the full year 2025. Perhaps more importantly, it appears to us that the pace of AI-related filings is accelerating as the year progresses. There is no doubt that by year-end 2026, the number of AI-related lawsuit filings will be one of the most important D&O stories of the year.
One more way that these two new lawsuits are similar is that they involve allegations based almost exclusively on assertions that first appeared in short-seller reports. As long-time readers know, I have frequently cautioned against over-reliance on allegations drawn from short seller reports. Short sellers have an obvious financial incentive to try to make their target companies look questionable. And not only are the allegations in these new complaints based on short-seller claims, but the lawsuits have only just been filed and it remains to be seen how the lawsuits will fare.
I will say that the attempt in the Hyliion complaint to turn the individual defendants’ Rule 10b5-1 trades into evidence of deceptive intent is a stretch. The dollar figures involved are pretty minimal in my view – one defendant traded only $125,000 worth of his company shares, while the other defendants traded only $61,000 worth of company shares. These are hardly the magnitude of trades that might suggest an intent to defraud.