The Bitmain Lawsuit

November 27, 2018

 

Gor Gevorkyan v. Bitmain, Inc., Bitmain Technologies, Ltd. And DOES 1 to 10

 

A lawsuit was filed in the Northern District of California against Bitmain on 11/19/2018. See https://www.scribd.com/document/393971649/Bitmain-Class-Action In a brief summary, the Plaintiff alleged:

  1. Bitmain marketed and sold ASIC miners that were preconfigured to use the customers’ electricity to generate crypto for its own benefit.

  2. Counts are for unfair business practice, unjust enrichment and conversion

 

The Plaintiff bought his ASIC in January 2018, it was hard to configure, and it came pre-configured to operate in full power mode, at which time it mined for the benefit of Bitmain, using the Plaintiff’s electricity.

 

The complaint alleges there are over 100 Class members and the amount in controversy exceeds $5 Million.

 

The crux of the allegations are that for the past two years, when someone bought an Asic, it would mine in high-power mode and sweep the mined coins to Bitmain’s own account until the user configured the settings, which is a long and cumbersome process.

 

Plaintiff’s first count is that Bitmain used unfair competition, which was unlawful, fraudulent, deceptive, untrue or misleading advertising and offends public policy, is immoral, unethical, oppressive, and unscrupulous, as the gravity of the conduct outweighs any of the alleged benefits.  Plaintiff demands the Court to issue an order requiring Bitmain to stop their unfair competition, pay restitution of all expenses incurred as a result of Bitmains unfair and deceptive practices; pay interest at the highest rate allowable by law and pay the Plaintiff’s attorney’s fees.

 

The Second count is for unjust enrichment, stating that Bitmain received a benefit at the expense of the Plaintiff, including electricity costs. Plaintiff seeks the Court to require Bitmain to disgorge all moneies, profits and gains that it obtained at the expense of the Plaintiff.

 

The third count is for conversion, stating Bitmain converted the use of Plaintiff’s and Class members’ ASIC devices and requests disgorgement.

 

I would have liked the lawsuit to include more information explaining how much the Plaintiff’s power bill was, and how much bitcoin he mined that got swept into Bitmain’s wallet, and perhaps a showing of that transaction on a blockexplorer.  From my understanding (which is pretty limited), miners from all manufacturers, not just bitmain, come with factory settings and begin mining as soon as they are powered on.  As soon as someone gets a miner, they should update the factory settings to their own customizable settings.

 

Regardless, if it is common knowledge amongst experienced miners, it should be clearly disclosed to all purchasers that your own wallet needs to be programed. When I searched Bitmain’s website, I found nothing that would alert someone that the miner would be mining for Bitmain until configured, although there are extensive instructions on configuration. There were no Terms of Use or Terms of Service on the website.

 

 There was a short disclaimer that  simply says,

 

Disclaimer

You are not allowed to access (or attempt to access) this service by any means other than through the means we provide or have indicated to be used, and you specifically agree not to access (or attempt to access) this service via any illegal or unlawful means or use this service to support any illegal or unlawful activities or purpose.

By entering this website and signing up for this service, you acknowledge and agree that you are a person to whom this service may be lawfully provided in accordance with the laws of jurisdiction in which you are located.

 

The support page has a lot of information on it, but nothing saying the machines will mine for themselves until configured, https://service.bitmain.com/support

 

I watched a few youtube videos about the setup procedure, and none mentioned that prior to setup, coins would be mined for the manufacturer. https://www.youtube.com/watch?v=sz-XZL77qqs

 

In conclusion, I think the lawsuit has merit if it can actually prove that Bitmain was selling people miners without disclaiming that the miners would mine for Bitmain until configured otherwise, and that this actually happened to over 100 people and caused Bitmain to mine over $5 million worth of crypto.

 

 

 

 

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