Bitmain Charged With $5 Million Lawsuit for Fraud and Unauthorized Mining

Fresh trouble mounts for cryptocurrency mining giant Bitmain which finds itself facing a $5 million lawsuit over charges of fraud and unauthorized mining. Last week on November 19, lead plaintiff Gor Gevorkyan filed the case at the North District Court of California against Bitmain’s both - China and U.S.-based entities.

In the filing, the plaintiff argues that Bitmain mined digital currencies for its own benefits using the customers’ devices. The plaintiff says that the company takes the advantage of the long “initialization" period for set up of its ASIC devices.

“Until the complicated and time-consuming initialization procedures are completed, Bitmain’s ASIC [Application-Specific Integrated Circuit] devices are preconfigured to use its customers’ electricity to generate crypto currency for the benefit of Bitmain rather than its customers,” the filing notes.

The document filing notes that over 100 class members are involved in the action with the aggregate amount exceeding “$5,000,000, exclusive of interest, fees, and costs.” The lead plaintiff Gevorkyan explains his own case wherein he bought Bitmain mining devices, including the AntMiner S9, earlier this year in January 2018.

The plaintiff says that the mining devices were completely difficult to configure and huge excess time to initialize. The plaintiff claims that during the entire set up process, “the ASIC devices were pre-configured to mine and deliver crypto currency to Defendant. Also during this time, the ASIC devices operated at full power mode, consuming a substantial amount of electricity at Plaintiffs’ expense.”

This would continue until all the devices were linked to Gevorkyan’s personal account. The lawsuit thus charges Bitmain of engaging in “unfair business practices” by stealing the computing power from customers’ ASIC devices and causing “ascertainable and out-of-pocket losses.”

Thus the lead plaintiff and other members are seeking “full restitution of all expenses incurred as a result of Bitmain’s unfair and deceptive practices”.

This comes as another blow to Bitmain just at the time when the company is already feeling the heat of newly imposed U.S. sanctions on Chinese goods.