Bitmain is one of the most popular names in the industry today. The mining equipment manufacturer was one of the first to produce mining hardware for Bitcoin. While Bitmain has been known as a reputable organization for many years, the recent class-action lawsuit that was filed in the Northern California United States district court, states that Bitmain has been taking advantage of customers for years now.
Bitmain Taps Hash Power From Users For Its Benefit?
The suit states that the firm mines cryptocurrency for itself during the initialization process. The suit is being filed by one its customers who is a Bitcoin miner. The customer is filing for damages of $5 million for miners worldwide who have unknowingly suffered in the hands of Bitmain. The miner who noticed the scam is named Gor Gevorkyan. He lives in Los Angeles and he claims that the Bitmain delebrately let’s the initialization process last for hour during while it mines cryptocurrency for itself. If an outfit purchases a lot of units, it will contribute to Bitmain’s hash power significantly without any cost to the firm. The company profits from the process even before it receives the hash power.
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According to the filing, it’s impossible to know how many people must have been affected by this and so it’s not possible to know how many people the lawsuit covers. The number could range from hundreds to hundreds of thousands. According to Gevorkyan, things weren’t always like this. Bitmain only started this a couple of years ago. Miners previously had the option to consume less power during initialization.
While Gevorkyan has a strong theory, his claims must be proven in court. If they turn out to be true, Bitmain may cite its terms and conditions as defense. This defense, on the other hand, will be weakened if the plaintiff carries out an invocation of unfair competition and unjust enrichment.
A Blockchain lawyer, Nelson M. Rosario, has this to say about the lawsuit:
“If the allegations are true (we believe that they are), this isn’t going to be good for Bitmain. Even if they claim that customers agreed to this when they signed the terms and conditions, it still isn’t a good look if you bring legality to play. Per legality, the plaintiff is saying that Bitmain carried out unfair business practices because they were benefiting at the expense of someone else and they didn’t compensate the person. This is basically stealing.”
Frontier Law Center and Robert Starr is litigating the suit on behalf of Gevorkyan. These two parties have experience in prosecuting these class action suits. They have helped many people claim damages from organizations in the past.
If Bitmain decides to settle, any customer who decides to purchase their product will be eligible for damages. However, it is not clear if those who bought their products during the qualifying period would be eligible for damages. This is because the initialization process starts again after the hardware resets. No matter what the result of the case may be, the suit may affect the reputation of Bitmain as it is making plans to host an IPO against next year. Investors will be less likely to pour their money into the IPO.