Crypto Mining Firm Files Fraud Lawsuit Against Chinese Supplier Over $900K Scam

On Monday, March 18, 2024, Wattum Management, Inc., a cryptocurrency mining equipment provider, filed a verified complaint against Chengdu Chenxiyu Technology Co., Ltd. and two individuals in the Southern District of Florida federal court.

According to the complaint, in May 2023 Wattum ordered over 600 Antminer mining machines worth close to $1 million from Bitmain to fulfill an order from their client First Argentine Mining Company. Looking to take possession of the machines on time, Wattum reached out to Chengdu Chenxiyu Technology, who claimed they could provide 650 similar machines by June of that year.

Wattum agreed and signed a purchase agreement with Chengdu for 650 machines at a price of over $900,000. As per the agreement, Wattum paid Chengdu in four installments throughout June to different cryptocurrency wallets provided. However, once all payments were made, Chengdu became unresponsive and the machines were never delivered.

Wattum then started an investigation into the matter with the help of law enforcement. Through blockchain transaction tracing, they found that right after receiving the funds, Chengdu rapidly converted them to other crypto tokens like Ethereum and wired the amounts to multiple different wallets hosted on popular exchanges OKEx and Binance.

By contacting the exchanges, Wattum discovered that the funds had been further transferred between numerous wallets under Chengdu’s control in an attempt to disguise the money trail. OKEx has since frozen these wallets and consolidated the implicated funds as per Wattum’s request.

The complaint alleges fraud, breach of contract, unjust enrichment, conversion, and civil theft against Chengdu and seeks compensation of over $900,000 plus damages. It also names OKEx and Binance as nominal defendants to release any funds under their custody obtained through the alleged fraud.

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