Key Takeaways
- According to the lawsuit filed by Riot, Rhodium “deliberately miscalculated” the amount it owed in hosting fees for Riot’s services.
- Riot alleges that Rhodium cheated Whinstone out of $26 million from 2021 to the first quarter of 2023.
Whinstone US, a wholly owned subsidiary of bitcoin mining firm Riot Platforms (RIOT), has filed a lawsuit against Texas-based bitcoin firm Rhodium Enterprises. On May 2, Riot lodged a civil complaint for breach of contract against four subsidiaries of Rhodium with the district court of Milam County in Texas.
Riot disclosed the allegations raised against Rhodium in its first-quarter earnings released earlier this week.
According to the lawsuit filed by Riot, Rhodium “deliberately miscalculated” the amount it owed in hosting fees for Riot’s services. The legal action also states that both companies had agreed to share the net revenue from Rhodium’s mining activities at the Whinstone facilities and alleges that Rhodium cheated Whinstone out of $26 million from 2021 to the first quarter of 2023.
Whinstone claims that it made attempts to collect payments from the Rhodium subsidiaries in May 2022 and on April 5, but they refused or neglected to make the payments, which ultimately led to the filing of the lawsuit.
Riot’s legal argument further asserts that Rhodium’s subsidiaries falsely recorded power credits on their books for a period of two years, which they did not possess. Additionally, Riot is currently seeking a ruling from the court that it has no obligation to provide Rhodium with any power credits.
In October 2022, the Rhodium subsidiaries requested Whinstone to confirm that they were entitled to power credits unrelated to the expired contracts. However, Whinstone declined this request and instead filed a petition with the court, seeking a declaration that it has no obligation to provide any power credits to Rhodium.
Mentioning the possibility of Rhodium repaying the money it allegedly owes Riot as hosting fees, the lawsuit states, “Because this litigation is still at this early stage, we cannot reasonably estimate the likelihood of an unfavorable outcome or the magnitude of such an outcome, if any.”
Reportedly, Rhodium was officially served on May 8 and has been given until May 30 to respond to the lawsuit.
