Compass Mining customers have sued company and accuse it of fraud
2023.01.19 06:15
Compass Mining customers have sued company and accuse it of fraud
By Tiffany Smith
Budrigannews.com – After Compass Mining cut ties with Russian hosting company Bit River and failed to return customers’ Bitcoin machines, citing a non-applicable United States sanction, customers are suing the company for over $2 million, alleging fraud.
Compass Mining notified Bit River in April 2022 that it had ended its “relationships and dealings with Bit River” as a result of the sanctions imposed by Executive Order 14024, as stated in a court document filed on January 17.
It is alleged that Compass “did not offer” to return or even retrieve the Bit River-hosted assets that its customers had given it to host.
However, it was stated that the assertion that the return of the mining equipment would be in violation of Executive Order 14024, which forbids transactions with sanctioned parties, is “false.”
Compass has “both the right and obligation to effect the return of its customers’ miners,” according to the court document.
Customers’ concerns were met with hostility from Compass representatives, who stated that the company is “unable to conduct or even facilitate” any business dealings with Bit River.
The Russian company is said to have allegedly redirected its customers back to Compass when they were forced to contact Bit River. The following responses were provided by Bit River representatives:
“From a legal standpoint, Bit River has a contract with Compass, and Compass owns all equipment. As a result, Compass must be used to directly answer all questions.
According to the court document, Compass should have informed Bit River that they are “simply the middleman” and that the plaintiffs paid for and own the machines.
The initial goal of the partnership with Bit River was to make it possible for Compass customers to host their machines at Bit River’s facilities in order to benefit from the “enterprise-grade, low-cost, and low-carbon cryptocurrency mining facilities in Russia.”
In addition, the court document stated that Compass’s claim of an “uptime of 95%” for its machines was incorrect, stating that it was actually “closer to 50-60%.” Occasionally, miners were offline for several weeks or months at a time.
In the midst of the ongoing crypto winter, Compass was the first mining company to announce job cuts in July 2022. 15% of the company’s employees were laid off, and top executives and staff members saw significant pay reductions.
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