Crypto Miner Coinmint Sues Chipmaker for $23 Million in Bitcoin Mining Scheme

In the Brief:

  • Coinmint sues Katena Computing and DX Corr for $23m in damages for fraud and breach of contract in a $150m purchase agreement for bitcoin mining machines.
  • DX Corr files motion to dismiss.
  • Coinmint alleges deception in machine delivery.
  • Coinmint has a history of legal cases, including tax fraud allegations.

2 - 4 minute read

In a recent lawsuit filed in California’s Santa Clara County Superior Court, Coinmint, a New York-based crypto miner, has accused two semiconductor companies, Katena Computing and DX Corr, of luring the miner into a $150 million purchase agreement through an “elaborate deception.” According to Coinmint, the two companies created a scheme to convince it to buy up to $150 million of bitcoin mining machines that Katena couldn’t and didn’t plan to deliver on. The lawsuit alleges fraud, breach of contract and fiduciary duty, as well as aiding and abetting against DX Corr and its executives as well as former Coinmint employees. Coinmint is seeking over $23 million in damages, including actual, compensatory and consequential damages, as well as punitive and exemplary damages.

This is not the first time Coinmint has been involved in litigation. In the past, its two co-founders fought over the firm’s ownership, and Coinmint filed a complaint with the New York Public Service Commission against the utility of Plattsburgh, where it operates, to avoid paying a deposit related to its electricity use. The company was also involved in a tax fraud case in Puerto Rico, where it is headquartered, that was settled under a confidentiality agreement.

Coinmint alleged that Katena “improperly influenced, bribed or incentivized co-conspirators,” including one unnamed person within the mining firm, for a $150 million purchase of bitcoin mining machines. The unnamed individual was the Coinmint CFO at the time of the alleged deception. According to a filing with the U.S. Securities and Exchange Commission and a LinkedIn profile, Michael Maloney was Coinmint’s CFO at the time. Maloney declined to comment on the matter.

Under the scheme, Katena used the contract to try to get funding from investors, including investment bank JP Morgan. DX Corr has filed a motion to dismiss the lawsuit, saying Coinmint didn’t sufficiently bring any claims to support its allegations against the semiconductor firm.

The Bottom Line

The recent lawsuit by Coinmint against two semiconductor companies, Katena Computing and DX Corr, puts the spotlight on the need for investors to exercise due diligence while investing in the crypto market. Investors should take the time to research the companies they plan to invest in and ensure that they are not falling for fraudulent schemes. While the case is still ongoing, it is a reminder that the crypto market is not immune to fraud and investors should be cautious.

Disclaimer: The content in this article is provided for informational purposes only and should not be considered as financial or trading advice. We are not financial advisors, and trading carries high risk. Always consult a professional financial advisor before making any investment decisions.

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