Wednesday, February 8, 2023
 

Compass Mining Sued For Over $2 Million Over Alleged Fraud

  • Crypto miner Compass Mining has been sued by its customers for alleged fraud.
  • Customers have demanded over $2 million for the mining firm’s failure to return their equipment.
  • The issue stems from Compass Mining’s suspended contract with Bit River, a Russian hosting firm.

The popular crypto-mining firm Compass Mining has been accused of fraud by its customers, who are now suing the firm for over $2 million. The lawsuit revolves around the mining firm’s failure to return bitcoin mining equipment belonging to its customers.

According to a filing made in the U.S District Court for the Southern District of Florida, the lawsuit stems from a contract between Compass Mining and Bit River, a Russian hosting company. In April 2022, the U.S. Office of Foreign Assets Control (OFAC) imposed sanctions on Bit River.

The sanctions led Compass Mining to suspend its contract with Bit River, given that its hosting facility was located within Russia. However, the customers have argued in the filing that the OFAC’s order does not prohibit the recapture or the demand for return of property under the temporary control of a sanctioned party.

According to them, the mining firm cited a non-applicable sanction to withhold their mining equipment. When contacted by customers, the representatives of Compass Mining couldn’t provide a satisfactory solution to their concerns.

The customers subsequently contacted Bit River, who stated “From a legal point of view, Bit River’s contract is with Compass, and all equipment is owned by Compass. Thus you must address all questions directly with Compass.”

Additionally, the customers alleged in the filing that the mining firm’s claim of 95% uptime was false and that the actual uptime of their mining machines was between 50% to 60%.

The lawsuit comes at a time when firms operating in the crypto mining sector are anticipating a bullish outlook following weeks of poor performance. The share prices of fellow crypto miners, including Argo Blockchain and Marathon Digital, have performed well since the beginning of this year.

  • Crypto miner Compass Mining has been sued by its customers for alleged fraud.
  • Customers have demanded over $2 million for the mining firm’s failure to return their equipment.
  • The issue stems from Compass Mining’s suspended contract with Bit River, a Russian hosting firm.

The popular crypto-mining firm Compass Mining has been accused of fraud by its customers, who are now suing the firm for over $2 million. The lawsuit revolves around the mining firm’s failure to return bitcoin mining equipment belonging to its customers.

According to a filing made in the U.S District Court for the Southern District of Florida, the lawsuit stems from a contract between Compass Mining and Bit River, a Russian hosting company. In April 2022, the U.S. Office of Foreign Assets Control (OFAC) imposed sanctions on Bit River.

The sanctions led Compass Mining to suspend its contract with Bit River, given that its hosting facility was located within Russia. However, the customers have argued in the filing that the OFAC’s order does not prohibit the recapture or the demand for return of property under the temporary control of a sanctioned party.

According to them, the mining firm cited a non-applicable sanction to withhold their mining equipment. When contacted by customers, the representatives of Compass Mining couldn’t provide a satisfactory solution to their concerns.

The customers subsequently contacted Bit River, who stated “From a legal point of view, Bit River’s contract is with Compass, and all equipment is owned by Compass. Thus you must address all questions directly with Compass.”

Additionally, the customers alleged in the filing that the mining firm’s claim of 95% uptime was false and that the actual uptime of their mining machines was between 50% to 60%.

The lawsuit comes at a time when firms operating in the crypto mining sector are anticipating a bullish outlook following weeks of poor performance. The share prices of fellow crypto miners, including Argo Blockchain and Marathon Digital, have performed well since the beginning of this year.

 

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