Jury Awards $138M to Bitcoin Miner in Breach of Contract Lawsuit Against Marathon Digital Holdings
On Thursday, July 18, 2024, a unanimous jury verdict was released in a federal breach of contract lawsuit between crypto mining entrepreneur Michael Ho and digital asset company Marathon Digital Holdings. The jury awarded $138 million in damages to Ho, who had been seeking compensation after Marathon allegedly circumvented their agreement regarding a crypto mining opportunity.
The trial, which lasted two weeks, took place in the U.S. District Court for the Central District of California. Ho, a former executive at bitcoin mining firms US Bitcoin Corp. and now Hut 8 Corp., brought the lawsuit claiming Marathon failed to uphold the terms of a confidentiality and profits sharing agreement they had entered into in 2020.
According to court documents, Ho discovered that a Maryland-based electricity producer called Beowulf Energy had unused energy capacity available that could potentially be utilized for Bitcoin mining. Ho agreed to share this proprietary information with Marathon’s former CEO Merrick Okamoto on the condition that Marathon sign a contract. The contract was to ensure that Ho would not be cut out of any deal between Marathon and Beowulf, and that he would receive a fair share of any profits resulting from the use of the information.
However, the lawsuit alleged that after Marathon secured a transaction with Beowulf, they refused to communicate meaningfully with Ho about compensation as per their agreement. It was claimed Marathon misused Ho’s information to make a deal and profits for themselves, cutting Ho out of the portion of gains he was entitled to under the signed contract.
Ho, represented in the case by Los Angeles firm Affeld England & Johnson, originally filed the suit against Marathon in California state court in January 2021 through separate counsel. The complaint included causes of action for breach of written and implied contracts, unjust enrichment, and intentional and negligent interference with prospective economic relations.
During the two-week trial, Ho’s legal team argued Marathon had wrongly circumvented Ho and their agreement by using his lead on Beowulf’s energy capacity for their own benefit without compensating him as promised. Marathon denied the allegations but the jury found in favor of Ho, unanimously awarding the $138 million damages amount.
Affeld England & Johnson founding partner David Affeld, who collaborated with initial outside counsel on the trial, said the verdict sends an important message. Affeld stated that if the decision had not supported Ho’s position, it could have discouraged open collaboration and idea-sharing for crypto deals out of fears of being excluded from profits.
