Bitmain Sued For Allegedly Using Customers’ Devices To Mine Cryptocurrencies

News | November 27, 2018 By:

Chinese crypto mining giant Bitmain has been sued for allegedly mining cryptocurrencies without the customers’ consent. The class action lawsuit was filed by Los Angeles County resident Gor Gevorkyan in the North District Court of California.

The lawsuit claims that Bitmain redesigned its ASIC devices to mine cryptocurrency for the benefit of itself rather than its customers who purchase the products.

“In the past, Bitmain ASIC devices could be configured and initialized in low-power mode that did not mine cryptocurrency for Bitmain,” the lawsuit said. “Recently, Bitmain modified the startup procedure for its ASIC devices such that the devices immediately start in full power high energy consumption mode before the customers account is linked to the device and stay in that mode until the setup process is complete. Moreover, the default account setting on the Bitmain ASIC devices is set to contribute to Bitmain’s own account on its own Antpool server. As a result of this new practice, Bitmain ASIC devices cost more to operate during the setup phase and transfer virtual currency to defendant rather than the customers.”

Gevorkyan claims that he purchased Bitmain devices, including its S9 Antminer machine, in January 2018. It reportedly took him “a substantial amount of time” to properly configure the product. During this time, he claimed that the devices were pre-configured to mine cryptocurrencies for Bitmain and operated at cost-intensive “full power mode,” at his expense.

“The ASIC devices were mining cryptocurrency from the moment the plaintiff started the device and it would transfer any electronic cryptocurrency mined to the defendant,” the lawsuit said. “This continued until the ASIC devices were associated with plaintiff’s personal cryptocurrency account.”

According to the filing, there are more than 100 class members involved in the lawsuit and that the aggregate amount in controversy exceeds $5 million.

In a statement, Bitmain said that it does not mine with customers’ equipment and, considering that mining for itself is a small part of Bitmain’s business, it has less incentive to do so compared to shipping the equipment as soon as possible to fulfill any confirmed orders.