Compass Mining sued for losing Bitcoin mining machines bought by customers

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Clients are suing Compass Mining for almost $2 million, alleging fraud, after the company severed links with the Russian hosting firm Bit River and neglected to restore customers’ Bitcoin machines, citing an inapplicable United States sanction as the cause.

A court document submitted on January 17 states that Compass Mining informed Bit River of the termination of its “relationships and dealings” in April 2022 as a result of the restrictions imposed by Executive Order 14024.

Compass is accused of having “not offered” to return or even just collect the assets its clients had given it to store in Bit River’s facilities in Russia.

It was clarified that the claim that returning the mining equipment would be under Executive Order 14024, which forbids doing business with sanctioned entities, is “wrong.”

Compass has “both the right and obligation to effect the recovery of its customers’ miners,” according to the court statement.

Customer complaints were handled with animosity by Compass staff, who claimed they were “unable to perform or even assist” any business transactions with Bit River.

The Russian company allegedly directed its consumers back to Compass when they had no choice but to contact Bit River. In response to inquiries, representatives of Bit River stated:

“From a legal standpoint, Compass and Bit River have a contract, and Compass owns all of the equipment. Therefore, you must ask Compass all questions directly.

According to the court papers, Compass should have informed Bit River that they were “merely the middlemen” and that the plaintiffs themselves had purchased and owned the devices.

The initial goal of the agreement with Bit River was to give Compass’ clients access to “enterprise-grade, low-cost and low-carbon cryptocurrency mining facilities in Russia” by hosting their machines at Bit River’s facilities.

According to the court statement, Compass misrepresented the “uptime of 95%” of their computers, indicating that it was actually “closer to 50-60%.” Sometimes miners would go weeks or months without being online at all.

Compass was the first mining company to announce employment losses during the ongoing crypto winter in July 2022. In addition to huge salary cutbacks for top executives and personnel, the company let go 15% of its workforce.

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