New York-based crypto miner Coinmint has accused two semiconductor companies of setting up an “elaborate deception” to convince it into a $150 million purchase agreement, resulting in a lawsuit seeking over $23 million in damages. Coinmint has alleged that bitcoin technology firm Katena Computing and semiconductor designer company DX Corr collaborated to persuade Coinmint into purchasing up to $150 million worth of bitcoin mining machines that Katena could not and had no intention of delivering.
According to the lawsuit filed in California’s Santa Clara County Superior Court on January 26, Katena “improperly influenced, bribed, or incentivized co-conspirators,” including an unnamed person within the mining firm, to arrange for the $150 million purchase of bitcoin mining machines. Coinmint is now suing for fraud, breach of contract and fiduciary duty, and aiding and abetting against DX Corr, its executives, and former Coinmint employees. The company seeks the $23 million it deposited for the sale, alongside punitive and exemplary damages.
On the other hand, Katena, which is currently in binding arbitration concerning Coinmint’s alleged breach of contract, remains eager to discuss the dispute factually and openly. However, due to the arbitration process and its confidentiality requirements, the company is unable to do so at this time.
Meanwhile, DX Corr has filed a motion to dismiss the lawsuit earlier this month, claiming Coinmint failed to provide adequate claims to support its allegations. Coinmint, it seems, is no stranger to litigation. Among its past legal troubles, the company has faced disputes involving cofounders, dealt with tax fraud cases in Puerto Rico, and launched complaints against utilities in Plattsburgh.
The lawsuit also accuses an unnamed Coinmint employee of initiating conversations over the equipment purchase, and facilitating Katena’s plot to convince Coinmint of its groundbreaking semiconductor technology. Coinmint’s former Chief Financial Officer (CFO), Michael Maloney, who is mentioned in the filing, denies the allegations.
According to the lawsuit, Katena additionally offered the CFO position and equity to Maloney. Coinmint signed the sales contract in May 2021 “without security or customary protection,” and paid $23.4 million in deposit payments to Katena, allegedly receiving nothing in return.
Overall, this case highlights a crucial challenge facing both established and emerging businesses in the rapidly growing crypto space: navigating the complexity of the ever-evolving cryptocurrency ecosystem while protecting their interests from potential fraud and deception.