Customers are suing Compass Mining for more than $2 million, alleging fraud, after the company cut ties with Russian hosting company Bit River and failed to return customers’ Bitcoin machines, citing an unlawful penalty as reason. United States Applicable.
According to a court document archived On January 17, Compass Mining issued a notice in April 2022 that it had terminated its “relationships and dealings with Bit River” due to the sanctions imposed by Executive Order 14024.
It is alleged that Compass “did not offer” to return or even recover the assets that its clients entrusted to the company to house at the Bit River facility in Russia.
However, it was claimed that it is “false” that the return of the mining machines would be in violation of Executive Order 14024, which prohibits dealings with sanctioned entities.
The court document noted that Compass has “both the right and the obligation to effect the return of its customers’ miners.”
Compass representatives responded to customer concerns with hostility, saying it is “unable to conduct or even facilitate” any business dealings with Bit River.
When its clients had no choice but to contact Bit River, the Russian firm allegedly directed them back to Compass. Bit River representatives responded to those who reached out:
“From a legal standpoint, Bit River’s contract is with Compass and all the equipment is owned by Compass. Therefore, you should address all questions directly with Compass.”
The court document noted that Compass should have disclosed to Bit River that they are “simply the middleman” and that the machines were actually paid for and owned by the plaintiffs themselves.
The partnership with Bit River was originally intended to allow Compass customers to host their machines at the Bit River facility to take advantage of Russia’s “low-cost, low-carbon, enterprise-grade cryptocurrency mining facilities.”
Related: For foreign trade only: Bank of Russia opposes free crypto investment
The court document further stated that Compass’s promise of “95% uptime” for its machines was inaccurate, stating that it was actually “closer to 50-60%.” In some cases, miners were not online at all for weeks or months at a time.
In July 2022, Compass was the first mining company to announce job cuts amid the ongoing crypto winter. The company laid off 15% of its employees, while top executives and staff took significant pay cuts.
