Home CryptocurrencyAltcoin Compass Mining sued for loss of Bitcoin mining machines purchased by customers

Compass Mining sued for loss of Bitcoin mining machines purchased by customers

by SuperiorInvest

Customers are suing Compass Mining for more than $2 million for alleged fraud after the company severed ties with Russian hosting company Bit River and failed to return customers’ bitcoin machines, citing unenforceable United States sanctions.

According to a court document filed on January 17, Compass Mining announced in April 2022 that it had ended its “relationships and dealings with Bit River” due to sanctions imposed by Executive Order 14024.

It is alleged that Compass “did not offer” to return or even retrieve the assets that its customers entrusted the company to host at Bit River’s facilities in Russia.

However, it was said to be “false” that returning the mining machines would violate Executive Order 14024, which prohibits dealings with sanctioned entities.

The court document states that Compass has “both the right and the duty to secure the return of its customers’ miners.”

Compass representatives met customer concerns with hostility, saying it was “not in a position to manage or even facilitate any.” business negotiations with Bit River.

When its customers had no choice but to contact Bit River, the Russian firm reportedly referred them back to Compass. Bit River representatives responded to those who reached out:

“Bit River is legally contracted with Compass and all equipment is owned by Compass. So you must address all questions directly with Compass.”

The court document noted that Compass should have disclosed to Bit River that they were a “mere middleman” and that the machines were actually paid for and owned by the plaintiffs themselves.

The partnership with Bit River was originally intended to allow Compass customers to host their machines on Bit River’s facilities to use “enterprise, low-cost and low-carbon cryptocurrency mining facilities in Russia.”

Related: For foreign trade only: Bank of Russia opposes free crypto investments

The court document went on to say that Compass’ promise of “95% uptime” for its machines was inaccurate, saying it was actually “closer to 50-60%. In some cases, miners have not been online at all for weeks or months.

In July 2022, Compass was the first mining company to announce job cuts in the midst of an ongoing cryptozyme. The firm laid off 15% of its workforce, while top managers and staff took significant pay cuts.

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