- In April, Sphere 3D (ANY) initiated legal action against Gryphon Digital Mining, alleging that a spoofing attack resulted in the loss of $500,000 worth of BTC.
- Gryphon argues Sphere’s alleged inadequate security measures inadvertently paved the way for a malicious actor to compromise the company’s systems.
Cryptocurrency mining company Gryphon Digital is actively seeking to have a lawsuit filed against it by its former partner, Sphere 3D, thrown out of court. The legal tussle revolves around a spoofing attack that led to the loss of 26 Bitcoins, with a cumulative value of $500,000.
In April of this year, Sphere 3D (ANY) initiated legal action against Gryphon Digital Mining, alleging that a spoofing attack resulted in the loss of $500,000 worth of Bitcoin. The term “spoofing” refers to the act of creating false information or adopting a deceptive identity to manipulate systems or gain unauthorized access.
Recent court documents filed on August 18 revealed that Gryphon’s CEO, Rob Chang, purportedly executed the transfer of 18 Bitcoins to a spurious address posing as Sphere 3D’s Chief Financial Officer back in January. Following this, an additional eight Bitcoins were transferred to the same address a few days later. Gryphon’s defense centers around the contention that they were, in fact, victims of Sphere’s alleged “gross negligence.”
“Sphere’s complete and utter lack of care with respect to the safeguarding, security, and control of its technology systems resulted in Gryphon sending over $500,000 worth of bitcoin to the hostile threat actor, which Gryphon has been unable to recover,” the lawsuit alleged.
They argue that Sphere’s alleged inadequate security measures inadvertently paved the way for a malicious actor to compromise the company’s systems, send falsified emails, and ultimately reroute cryptocurrency meant for Sphere to the attacker’s address.
In a retaliatory move, Gryphon has filed counterclaims against Sphere 3D. These counterclaims encompass allegations of breach of contract, negligence, and defamation. The ongoing legal spat traces its roots back to a partnership that commenced in August 2021, where Gryphon took charge of cryptocurrency mining operations for Sphere 3D. Although the initial plan was to merge under the Gryphon brand, these intentions were abandoned in April 2022.
Gryphon’s request for the lawsuit’s dismissal hinges on their argument that Sphere’s purported lax security standards inadvertently facilitated the fraudulent transfer of funds. Patricia Trompeter, CEO of Sphere 3D, had previously accused Gryphon of compromising the company’s assets and contractual obligations.