Bitmain Faces Lawsuit Over Allegedly Exploiting Customers’ Hardware to Generate Profit

Crypto mining giant Bitmain is currently facing charges filed by miner Gor Gevorkyan, alleging that the firm has been commandeering its customers’ mining hardware to illicitly generate revenue, Crowdfund Insider reported November 24.

As detailed in the report, Gor Gevorkyan, a miner in the U.S. state of North Carolina, has recently filed a lawsuit against Bitmain, claiming that the company has been lining their own pockets by exploiting its clients’ mining machine during the configuration process. According to Gevorkyan, after customers have purchased the hardware, Bitmain would then set it up for a few hours, some even days, during which time the machines would be started in low power mode, with all digital assets mined transferred to an unspecified default crypto account.

However, Gevorkyan clarified that Bitmain’s set up process has since been altered, stating that:

Recently, Bitmain modified the startup procedure for its ASIC devices such that the devices immediately start in full power high energy consumption mode before the customer’s account is linked to the device and stay in that mode until the setup process is complete. Moreover, the default account setting on the Bitmain ASIC devices is set to contribute to Bitmain’s own account on its own Antpool server.

He continued adding that:

Bitmain’s ASIC devices are preconfigured to use its customers’ electricity to generate cryptocurrency for the benefit of Bitmain rather that its customers…and lay the substantial costs of operating the ASIC devices at the feet of its customers….(resulting in) out of pocket losses.

The news follows on the heels of Bitmain’s recent expansion to the U.S. market, as the crypto mining titan launches its latest subsidiary in the state of Washington, Coinwire reported November 20. Apart from the newly established $20 million complex in Douglas County, Bitmain also operates in California which, as Gevorkyan claimed, falls under the Northern California courts’ jurisdiction.

As Gevorkyan further alleged, Bitmain has so far generated over “… 3-4 billion in operating profits in 2018” comprising of profits earned from Bitmain hardware users.

Meanwhile, the company is also involved in another ongoing lawsuit which Bitmain had previously filed against an unidentified suspect who allegedly breached the firm’s account, consequently resulting in the loss of roughly 617 Bitcoins equivalent to approximately $5.5 million at the time. However, based on Bitcoin’s current price, the stolen digital assets would now only be pegged at just roughly $2.2 million.

Amidst ongoing court cases, Bitmain is also in the process of listing its shares on the Hong Kong Stock Exchange.