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Bitmain accused of misappropriation of customer mining equipment

Bitmain accused of using equipment of clients

Bitmain, the largest manufacturer and operator of the largest cryptocurrency mining equipment and mining farms in the world undergoing scrutiny as Bitmain is being accused of misappropriation of customer mining equipment.

In a document tabled before the United States district court for California, a customer, Gor Gevorkyan, is seeking 5 million U.S dollars compensation for damages from Bitmain, because the company used Gor’s equipment to mine cryptocurrencies during the initialization stage of the equipment.

With the initialization process lasting for a couple of hours, “an outfit that purchased, say, 500, or more units, could, therefore, contribute significant hash power to Bitmain – at no actual cost to the company. In fact, the company has already profited prior to receiving this hash power,” reported Yahoo Finance.

The document tabled in court by Gevorkyan does not give a concrete number of people that are represented in the case because the number may be huge. Additionally, the number can be higher given that Bitmain only changed their working recently. In previous purchases, the crypto miner devices from Bitmain initialized at low power.

Although Bitmain may find a loophole in its ‘terms and conditions of purchase’ to try and avoid paying the damage fees, practically, it will have far-reaching consequences.

As Nelson M. Rosario, a blockchain lawyer notes:

“If these allegations are true (and we are no saying that they are)… that’s, that’s not good. Even under some sort of theory that customers agreed to this under the terms and conditions of their purchase, or something like that, this is not a good look regardless of its legality. With respect to its legality, the plaintiff is alleging unfair business practices, unjust enrichment (receiving a benefit at someone else’s expense), and conversion (basically stealing).”

However, whichever lane Bitmain takes, to settle the claimed damages or pin it on the terms and conditions of purchase, it will have negative effects on its upcoming Initial Public Offering (IPO).

If Bitmain chooses to settle the damages fee for the misappropriation of customer mining equipment, do you think even those who purchased second-hand miners will also be eligible for compensation seeing they also had to be reset and initialized again?

Let us know your thoughts in the comments section below.


Philip is an experienced blogger keen on staying updated with trends and news surrounding the blockchain and Bitcoin space. With several years of freelance experience in various industries, Philip brings his knowledge and experience into the crypto space.

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