Bitmain Up Against Lawsuit for Allegedly Unauthorized Mining at Clients’ Expense

Crypto mining company Bitmain is up against a class action lawsuit of $5 million that is claiming it mined cryptocurrency for its own benefit on its clients’ devices.

The filings were under docket listings for the North District Court of California.

The lead plaintiff, Los Angeles County resident Gor Gevorkyan, has pushed his lawsuit against Bitmain’s United States and China-based entities, claiming that the firm is profiting — without approval — from the drawn-out “initialization” duration that its ASIC [Application-Specific Integrated Circuit] devices need for set up:

“Until the complicated and time-consuming initialization procedures are completed, Bitmain’s ASIC [Application-Specific Integrated Circuit] devices are preconfigured to use its customers’ electricity to generate crypto currency for the benefit of Bitmain rather than its customers.”

In Gevorkyan’s situation, the filing cites he bought Bitmain devices, including its S9 Antminer machine, in January of this year. The product was said to be “difficult to configure” and during the “substantial amount of time” that passed by before he could fully initialize his devices, they functioned at cost-intensive “full power mode,” at his expense.

The filing states that “the ASIC devices were mining crypto currency from the moment Plaintiff started the device and it would transfer any electronic crypto currency mined to Defendant.” This allegedly kept on happening until the devices were linked with Gevorkyan’s personal account.

The lawsuit thus charges the firm of participating in “an unfair business practice,” and of having “unjustly enriched” the firm by converting the use of its clients’ ASIC devices and electricity, thereby leading to “ascertainable and out-of-pocket losses.”

Gevorkyan is looking for damages in excess of $5 million on behalf of all miners “similarly situated” as Bitmain patrons.

The lawsuit comes at an curious time for the mining giant; its China-produced mining rigs are most likely to be affected by recently enacted U.S. sanctions on Chinese goods; something that would be especially worrisome as according to the company’s pre-Initial Public Offering (IPO) prospectus, foreign sales made up for 51.8 percent of its total revenue last year.