Compass Mining faces lawsuit for reportedly losing Bitcoin mining machines

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Key takeaways:

  • Compass Mining severed ties with the Russian bitcoin mining company BitRiver and failed to return customers’ bitcoin mining equipment.
  • Compass attributed the situation to a US sanction.

Compass Mining Inc., a Delaware corporation, is being sued by a number of its clients for purportedly participating in deceptive activities. The lawsuit seeks damages in excess of $2,000,000.

The consumers accused Compass of fraud, violation of contract, and incompetence in a document submitted to a Florida court on January 17 after the company severed ties with BitRiver, a corporation with an official Swiss address but majority of its activities in Russia.

Due to the restrictions imposed by Executive Order 14024, Compass ended their interactions and operations with Bit River.

Compass is accused of having “not offered” to return or even just collect the assets its clients had given it to store in Bit River’s facilities in Russia.

It was deemed “false” by Compass to claim that returning the mining equipment is prohibited by US Executive Order 14024, which restricts conducting agreements with entities that have been sanctioned.

Consumers’ complaints were met with a harsh response from Compass representatives who claimed they were “unable to conduct or even enable” any business operations with Bit River.

Since “all the equipment is owned by Compass,” BitRiver “has refused and disregarded all enquiries from Compass customers,” states the  plaintiffs’ lawsuit. Compass owed BitRiver a disclosure that they were merely acting as a facilitator for plaintiffs who had purchased and owned the equipment.

According to the complaint, the total cost of the allegedly in question mining supplies and services is more than $1.75 million.

Compass has “both the right and obligation to effect the recovery of its customers’ miners,” according to the court statement.

Additionally, the court filing stated that Compass’ promises of a “uptime of 95%” for its equipment were inaccurate. The lawsuit claimed that this number was probably closer to 50% or 60%. The document also noted that mines frequently went offline for weeks or months at a time.

It can be said that, last few months have taken a toll on the mining segment of the industry as well.  The year’s decline in cryptocurrency values claimed yet another casualty last month when Core Scientific, one of the largest publicly traded bitcoin miners, chose to file for Chapter 11 bankruptcy protection.

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Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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