Compass Mining recently sustained a lawsuit by customers who claim the company lost their crypto mining machines in a deal with Bit River.
Compass Mining is currently facing a lawsuit for losing Bitcoin (BTC) mining machines procured by customers. According to reports, the aggrieved Bitcoin mining machine owners are suing Compass Mining for more than $2 million because the company failed to return the machines after severing ties with Russian hosting firm Bit River. Furthermore, the lawsuit alleges Compass Mining fraud and claims that the mining firm did not disclose its ‘middleman’ status to Bit River. As it stands, plaintiffs believe that Bit River may have assumed that Compass owned the mining machines.
The plaintiffs filed the lawsuit against Compass on January 17th with the United States District Court for The Southern District of Florida. Furthermore, the court document states that Compass issued a notice last April of its business termination with Bit River. The mining company also cited the sanctions imposed by Executive Order 14024 as the reason for the “relationships and dealings” termination.
Lawsuit Alleges Compass Mining Exhibited Apathy towards Return of Customers’ Assets
However, Compass allegedly did not offer to return or retrieve the assets its customers placed in its care. These BTC mining assets were reportedly deployed at Bit River’s facilities in Russia. Despite misplaced concern that returning the machines would violate Executive Order 14024, which frowns upon dealings with sanctioned entities, the court document thinks otherwise. According to this document, Compass has “both the right and obligation to effect the return of its customers’ miners.”
The court document also said that Compass’ claims of its machines’ “uptime of 95%” were inaccurate. According to the plaintiff, this figure was closer to 50% or 60%. In addition, the document pointed out that mines were offline for weeks or months in many instances.
However, Compass representatives responded to the concerns of customers with hostility. The firm, primarily involved in Bitcoin mining machine brokerage and hosting services, maintains it cannot conduct business with Bit River. When out of exasperation, customers reached out to Bit River instead, the Russian company allegedly directed them back to Compass. Explaining the need for the aggrieved party to return to Compass to chart a way forward, Bit River representatives said:
“From a legal point of view, Bit River’s contract is with Compass, and all equipment is owned by Compass. Thus, you must address all questions directly with Compass.”
The Compass partnership with Bit River initially sought to make the former’s customers host their machines at Bit River’s facilities. Furthermore, this arrangement was to leverage “enterprise-grade, low-cost and low-carbon cryptocurrency mining facilities in Russia.”
Compass Announced Job Cuts in July 2022 to Remain Profitable amid Crypto Winter
Last July, Compass became the first mining firm to announce a notable headcount reduction amid the sustained crypto bearish period. The company cut around 15% of its headcount, with top executives and other remaining staff taking sizable pay cuts. July’s Compass downsizing also came on the heels of the resignation of CEO Whit Gibbs and CFO Jodie Fisher.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.