California Court says ‘all systems go’ for Gevorkyan’s class action to proceed against Bitmain for self-dealing

News | August 29, 2022 By:

On Friday, August 26, 2022, the United States District Court for the Northern District of California denied a motion to dismiss the lawsuit filed by Gor Gevorkyan against Chinese crypto mining hardware manufacturer Bitmain. The case is styled as ‘Gevorkyan v. Bitmain,’ with case number #18-cv-07004-JD.

On November 19, 2018, Gevorkyan, a Los Angeles resident, filed a lawsuit against Bitmain for allegedly mining cryptocurrency at his expense. According to Gevorkyan, he purchased ASIC devices from Bitmain in January 2018, including an AntMiner S9, with the purpose of mining cryptocurrencies for his own benefit. Gevorkyan alleges that the ASIC devices he bought from Bitmain were first used by Bitmain to “mine cryptocurrency for itself” prior to delivery, and when they were eventually delivered to him, the devices were pre-configured to continue to “deliver Bitcoin to Bitmain rather than the customers who purchase the ASIC devices.”

Grevorkyan is seeking for an order compelling Bitmain to stop engaging in unfair competition, complete reimbursement of all costs, interest calculated at the maximum rate permitted by law, and payment of his legal fees and procedure-related costs.

Bitmain filed a motion asking the court to dismiss the complaint for lack of personal jurisdiction.

According to data provided by Gevorkyan, Bitmain HK made more than $50,000,000 in revenue from the sale of ASIC devices to consumers in California during the relevant time period. Bitmain did not dispute this evidence, but said that its California sales should not count for an “express aiming” finding because they were a “small proportion . . . relative to overall global sales.”

The court stated that:

“California sales “accounted for a fraction of Bitmain’s overall global sales,” ranging between “a mere 0.08% in 2019” to “1.09% in 2018”). That may be, but it is entirely irrelevant to the jurisdiction question. Our circuit has expressly rejected that ostensible objection…. Bitmain made matters worse by saying that the California sales should not count because Gevorkyan’s claims “would be unchanged even if Bitmain HK had not made any other sales [to customers other than Gevorkyan] in California.”

The court continues:

“Bitmain’s ASIC sales in California are sufficient to support an assertion of jurisdiction in a consumer action based on those sales activities. Bitmain “determines how and whether its orders are fulfilled, and here, Bitmain sold to Gevorkyan 20 ASIC devices through its website. Bitmain accepted payment, and delivered the products to Gevorkyan, shipping the devices to California.”

The court concluded:

“Bitmain’s motion to dismiss is denied. Bitmain’s request under Rule 12(f) to strike Gevorkyan’s nationwide class allegations on personal jurisdiction grounds is denied. The determination of the proper scope of any class is appropriately considered under Rule 23, not Rule 12(f). The case is re-opened, and the Court will issue a scheduling order.”

Please contact BlockTribune for access to a copy of this filing.