SBI Crypto Files Lawsuit against Texas-Based Mining Energy Provider for Fraud and Negligence

News | April 13, 2023 By:

On April 5, 2023, crypto miner SBI Crypto filed a lawsuit in the US District Court for the Western District of Texas against mining energy provider Whinstone US for fraud and violation of the Hosting Service Agreement.

SBI Crypto is a cryptocurrency mining subsidiary of Japanese financial services giant SBI Holdings with mining farms all around the world. Whinstone US is an operator of colocation data centers intended for large-scale cryptocurrency mining and high-speed video rendering.

In July 2019, the two companies entered into an agreement for Whinstone to host 20,000 crypto miners in Pyote, Texas, but the deal fell through. On October 24, 2019, Whinstone persuaded SBIC to enter into a new agreement by offering to host space and management services at its facility in Rockdale, Texas. According to the lawsuit, Whinstone made several false representations to induce SBIC to enter into the new Hosting Service Agreement.

The filing states:

“Whinstone’s representations about its Rockdale facility, however, were false. Specifically, Whinstone deliberately misled SBIC into believing it held the requisite building permits and power contracts to perform as promised, then concealed the substandard conditions at its facility. The lack of permits and power contracts delayed the ramp-up of SBIC mining operations and lead to millions in SBIC’s lost revenue. Whinstone’s failure to provide a datacenter environment in accordance with the parties’ agreement and basic industry standards directly led to underperformance of SBIC mining operations and damage to SBIC’s mining equipment. In sum, Whinstone’s deceptive acts and omissions caused SBIC to lose millions in lost profits and millions more in damaged mining equipment.”

SBI Crypto is seeking millions of dollars in damages from Whinstone US for the alleged fraud and violation of the Hosting Service Agreement.

A copy of the original filing can be found here.