Bitmain is yet again facing another bit of bad news. On top of having to deal with questions regarding its financial situation and a decline in market share, the cryptocurrency mining equipment manufacturer is facing a fresh lawsuit in California.
The class-action suit asserts that Bitmain has, for some time now, intentionally used customers’ machines for its own crypto mining purposes while the customers were still configuring their rigs. Plaintiff Gor Gevorkyan asserts, “Until approximately 2 years ago, the machines started in low power mode…(and) there was no default account setting to which virtual currency mined during the setup process was directed and transferred.”
Gevorkyan, a resident of Los Angeles County, adds, “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.”
Configuring a new crypto miner can take a couple of hours or a couple of days, depending on what operations are to be run. Gevorkyan indicates that, during this time, “Bitmain’s ASIC [application-specific integrated circuit] 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 plaintiff further asserts that the case can legally be heard in California because Bitmain maintains an office in the state. This past July, the company opened an office in Silicon Valley.
Gevorkyan is seeking $5 million, which the lawsuit asserts is on behalf of all cryptocurrency miners. Companies that may have purchased large quantities of Bitmain’s equipment could have unknowingly been contributed to the company’s control of hash power at virtually no cost to Bitmain.
Nelson M. Rosario, addressed the lawsuit in a post last week. In a blog post on theblockcrypto.com called Crypto Caselaw Minute, the blockchain lawyer stated, “If these allegations are true (and we are not saying that they are) … that’s, that’s not good. Even under some sort of theory that customers agreed to this under the terms & conditions of their purchase, or something like that, this is not a good look regardless of its legality. With respect to its legality, the plaintiff is alleging unfair business practices, unjust enrichment (receiving a benefit at someone else’s expense), and conversion (basically stealing).”
The post Bitmain facing class-action lawsuit over mining operations appeared first on Coingeek.
An amended class action lawsuit alleging insider trading at cryptocurrency wallet and exchange service Coinbase will go to court, after an initial application to the courts was turned down on a legal technicality.
The decision, published in court documents uploaded by Coinbase, means the case will be heard on January 31, 2019, in a district court in north California, giving the plaintiffs the chance to put their arguments in front of a judge for the first time.
The case concerns allegations of insider trading at Coinbase over its handling of the bitcoin BCH rollout in 2017, which many users had felt resulted in Coinbase staff profiting at the expense of the market.
The initial application was rejected in October, after petitioner Jeffrey Berk had failed to “describe the scope or content of Coinbase’s duty.” However, the amended filing now highlights how Coinbase breached its own listing rules, which claimants suggest will now form the basis of their class action.
According to the filing, Coinbase did in fact sell BCH at artificially inflated prices to its own benefit during the launch last year. It stated, “The sudden launch (of BCH) was effectively part of an attack by Coinbase and (CEO Brian Armstrong) to depress the price of BTC and to inflate the price of BCH, to encourage more transactions and greater profitability for Coinbase.”
“As a consequence of this scheme, the Individual Defendants and Coinbase enabled Coinbase to earn significant fees from the trades of its customers, from which Coinbase earned a spread over an inflated price for BCH, and to avoid a ‘run’ on the Company by sellers anxious to take advantage of the inflated price, by closing down trading within minutes of the Launch to all except certain insiders who were positioned to and did sell BCH at inflated prices during the Launch,” according to the filing.
Coinbase has until December 20 to file a response to the claim, ahead of its court hearing at the end of January.
The judge who ruled on the first filing, District Judge Vince Chhabria, accepted that Coinbase had “bungled” the rollout of BCH.
The firm has since conducted its own internal investigation, which perhaps unsurprisingly found no foul play.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
The post Fresh Bitcoin Cash insider trading suit vs Coinbase goes to court appeared first on Coingeek.
The Winklevoss brothers are suing Charlie Shrem, claiming the crypto investor and entrepreneur owes them some 5,000 cryptocurrency worth $32 million from a previous business deal.
Last week, The New York Times reported that Cameron and Tyler Winklevoss have filed a lawsuit against Shrem—who they claimed acted as their first crypto adviser—in September. Shrem previously served a year in prison in 2016 over charges of money laundering and operating an unlicensed money transmitting business related to BitInstant exchange he had created.
In the lawsuit, the brothers said Shrem first accepted $750,000 to buy BTC on their behalf in 2012. Several months later, the twins gave him an additional $250,000 to purchase additional crypto.
At the time, one BTC was going for $12.50. Shrem allegedly turned over $189,000 worth of crypto to the brothers, and failed to deliver the rest. The lawsuit claimed that two brothers tried to get the remaining crypto from Shrem, but their efforts were in vain. The brothers eventually brought in an accountant who documented the missing funds.
Cameron and Tyler believed Shrem used their BTC to acquire new extravagant properties. After his release from prison two years ago, Shrem had purchased a few highly expensive items despite previously claiming that he did not have money, according to reports. The man reportedly bought two Maserati sports cars, property in Florida worth $2 million, and two powerboats.
In their lawsuit, the twins stated that unless Shrem had stumbled upon some jackpot in the last couple of years since he left prison, he is likely to be using money from their crypto for his recent purchases. A judge who worked on his previous trial has frozen some of Shrem’s properties.
While speaking to reporters, Brian Klein, Shrem’s lawyer stated that his client plans to defend himself vigorously and clear his name.
Shrem has been involved in other cryptocurrency scandals in that last years. He was arrested in 2014 after federal authorities accused him of knowingly using his company, BitInstant to sell crypto to people wishing to buy drugs online.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
The post Winklevoss twins take Charlie Shrem to court over alleged $32M crypto theft appeared first on Coingeek.
Cryptocurrency exchange Coinbase has escaped a class-action lawsuit accusing the San Francisco-based company of artificially inflating the price of Bitcoin Cash (BCH) in December 2017. For now, that is.
In March, a group of investors led by Jeffrey Berk filed a lawsuit against Coinbase, alleging that the crypto exchange tipped its employees a month before launching the Bitcoin BCH trading on its platform. The lawsuit claimed, “Unsurprisingly, those who had been tipped off, immediately swamped Coinbase and the GDAX with buy and sell orders, thinning the liquidity but obtaining BCH at fair prices. The market effect was to unfairly drive up the price of BCH for non-insider traders once BCH came on line on the Coinbase exchange.”
U.S. District Judge for the Northern District of California Vince Chhabria, however, saw it differently.
On Tuesday, Chhabria dismissed all claims without prejudice—with one exception—in Berk’s lawsuit on grounds that the “complaint does not sufficiently articulate the legal basis for his claims,” Coinbase reported. The judge noted that due to Berk’s failure to specifically describe the scope of Coinbase’s duty, “a reader of the complaint is thus left wondering what Coinbase should have done differently, or why the rollout of Bitcoin Cash would have gone more smoothly had Coinbase done whatever Berk thinks is appropriate.”
That one exception was Berk’s claim under the Commodity Exchange Act (CEA). According to the ruling, “Berk has a private right of action under the CEA only if he used Coinbase to make a ‘contract of sale of [a] commodity for future delivery’—in other words, a ‘futures contract.’”
In this particular claim, Berk cited the U.S. Commodity Futures Trading Commission (CFTC) vs McDonnell case, but Chhabria pointed out that the Coinbase lawsuit “is not an enforcement action brought by the CFTC,” noting that “Because Berk used Coinbase to purchase Bitcoin Cash, rather than to make a contract to purchase Bitcoin Cash at a specific date in the future, he cannot maintain a claim under the CEA.”
Berk and his lawyers now have 21 days to file an amended complaint.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
The post California judge junks lawsuit accusing Coinbase of insider trading appeared first on Coingeek.
Floyd Mayweather may be a champ in the boxing ring, but he might need a little more practice in cryptocurrency. This past April, an initial coin offering (ICO) he was promoting was shut down for security fraud by the Securities and Exchange Commission (SEC). Now, the undefeated pugilist might have to respond personally for his involvement.
According to a report published by TMZ, Mayweather faces a lawsuit from investors over the ICO for the Centra Tech cryptocurrency. They claim that the he is personally responsible, in part, for the millions of dollars lost by investors when the digital currency fizzled.
Mayweather promoted the cryptocurrency in person and through his social media accounts. On several occasions, he published pictures of himself holding the Centra debit card in an effort to attract customers to the company. He also repeatedly used the phrase, “You can call me Floyd ‘Crypto’ Mayweather from now on,” when providing publicity for Centra Tech.
Centra’s CTR digital currency was supposedly to be used to allow the company to offer a range of products, including the debit card. It attracted thousands of investors during the ICO, all of which have had to watch as the token became virtually useless.
The boxer isn’t the only high-profile celebrity caught up in the scandal. DJ Khaled, a music DJ and record producer, is also named in the lawsuit. Like his fellow backer, he would often appear sporting the Centra debit card and also referred to the company as a “game changer” in the cryptocurrency space.
During its 2017 ICO, the company raised $32 million from its ICO. However, Centra Tech founders, Robert Farkas and Sohrab Sharma, were arrested in April following an investigation by the SEC. The commission alleged that the company was operating illegally and had misled investors regarding its legitimacy. Among other things, it had released promotional material claiming company executives that didn’t actually exist and falsely linking itself to credit card giants Visa and MasterCard.
The lawsuit aims to see the investors recuperate their lost funds. The two Centra founders are also named in the suit, and are still looking at facing a judge over securities and wire fraud, as well as conspiracy charges.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
The post Floyd Mayweather, DJ Khaled facing lawsuit over ICO appeared first on Coingeek.
What could possibly be one of the largest private cryptocurrency lawsuits to ever hit the courts has been settled. The former CEO and one of the founders of Augur, Matthew Liston, sued the other founders this past April for $152 million over allegations that the founders had colluded with an investor to kick him out of the company. The details of the settlement were not disclosed and Liston indicates that the parties are still finalizing the details.
As reported by Forbes magazine, Liston sued for fraud, claiming that the other founders – Jeremy Gardner, Joseph Charles Krug and Jack Peterson – colluded with investor Joseph Ball Costello to force Liston out. He sought restitution for monetary loss, mental agony and damage to his reputation.
For reasons that haven’t been made clear, Liston had his lawyer, O. Shane Balloun, petition the San Francisco, California-based court to dismiss the suit. A check of court records shows that the case has been moved “off calendar,” meaning that it is no longer on the docket. Other court documents indicated last month indicated that negotiations are in progress, saying, “…the parties have reached a settlement in principle and are working diligently to finalize a written settlement agreement.”
Augur was created to allow individuals to place bets on the outcomes of real-world events, such as market crashes, natural disasters and even weather-related events. It was officially introduced this past July and was built on the Ethereum blockchain. The platform has received significant attention, driven, in part, by having Ethereum co-founder Vitalik Buterin and Lighting Labs co-founder Elizabeth Stark as its advisers.
Forbes asked Liston about the dismissal, but was only told that the case had been settled. Augur didn’t respond to requests for comment by the news outlet.
Since being pushed out of Augur, Liston hasn’t sat idle waiting for a payout. He is currently involved in other blockchain activities, such as the first religion based on the blockchain, Zero Ex Omega. The church received inspiration from decentralized ideologies and, like Augur, uses the Ethereum blockchain. He is also said to be working on an alternative competing site to Augur called Gnosis.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
The post Multimillion-dollar lawsuit against Augur settled out of court appeared first on Coingeek.
A newly consolidated lawsuit has been filed against BitConnect, several months after several cases have been brought forth against the company’s alleged fraudulent pyramid scheme at the beginning of 2018. BitConnect has been considered as the crypto sector’s biggest scam to date, following its false promotions and offering unregulated securities in connection with its initial coin offering (ICO).
Aggrieved by the loss of value in their crypto holdings, BitConnect investors rushed to court to seek redress. They sought to be indemnified by the now defunct startup, while looking to securities laws to support their allegations of fraud.
Last week, a new consolidated class action complaint has been filed in the U.S. District Court for the Southern District of Florida, CoinDesk reported. David Miller, of the Silver Miller law firm, told the news outlet that the new lawsuit not only consolidated the previous cases, but also named more BitConnect owners and promoters—Divyesh Darji and Trevon James—who weren’t included in the earlier lawsuits.
As reported by Coingeek in July, YouTube was also added to the suit for their ncegligence in promoting the fraudulent corporation. Google-owned YouTube was charged with negligence in connection with its alleged failure to protect or warn its users that BitConnect was a scam. The video streaming site reportedly published more than 70,000 hours of promotional videos, which were viewed more than 58 million times. According to documents filed in the Southern District Court of Florida, Google-owned YouTube ‘was aware or ought to have been aware that BCC promoters were using the channel to promote and lure unsuspecting investors in the U.S. and abroad into the fraudulent Ponzi scheme.
Following further lifting of Bitconnect’s corporate veil, a new lawsuit has been consolidated to include its Indian Head- Divyesh Darji and promoter Trevon James. They have been specifically named for the first time in the ongoing suits against the corporation. They are accused of launching an illegal pyramid scheme to swindle investors while passing it off as another crypto-startup.
Others named in the consolidated suit filed last Thursday in the U.S. District Court for the Southern District of Florida include: BitcConnect Public Limited, BitConnect International PLC, BitConnect Ltd, BitConnect Trading Ltd., and close to 40 people affiliated with the Ponzi scheme. The new lawsuit cites 22 various legal violations by the company.
The company has since been dissolved through court action after cease and desist orders were issued against it in Texas and North Carolina.
The suit seeks restitution and compensatory damages for victims. Silver Miller law firm has been appointed as the class action attorneys and David Miller as the lead counsel in the company’s defense.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
The post BitConnect faces fresh class action lawsuit: report appeared first on Coingeek.
The Securities and Exchange Commission (SEC) has won the backing of a U.S. court to halt an initial coin offering (ICO) that has been making wild claims about its regulatory status.
In the latest example of the SEC ramping up efforts against scam coins and ICOs, the commission petitioned a court to secure an emergency order against Blockvest LLC and its founder, Reginald Buddy Ringgold III.
The order concerns pre-ICO sales being promoted by the firm, which had been found to be claiming registered status and approval from the SEC—claims which were in fact untrue. This allegedly also included the use of SEC graphics and logos, ostensibly to convince investors on a false prospectus.
In a statement, the regulator said using the SEC seal without permission is in itself a violation of federal law.
“Blockvest and Ringgold, who also goes by the name Rasool Abdul Rahim El, were using the SEC seal without permission, a violation of federal law, and falsely claiming their crypto fund was ‘licensed and regulated,’” according to the SEC.
The SEC complaint also claimed Ringgold promoted the ICO with a fake agency he created called the “Blockchain Exchange Commission,” using a graphic similar to the SEC’s seal and the same address as SEC headquarters.”
In response, a district court in California issued the order, which grants the SEC the powers to freeze company assets, while making several other provisions for emergency relief.
Robert A. Cohen of the SEC’s Enforcement Division Cyber Unit said, “We allege that this ICO is using both the SEC seal and a made-up crypto regulatory authority to trick investors into believing the ICO was approved by regulators…The SEC does not endorse investment products and investors should be highly skeptical of any claims suggesting otherwise.”
The case is the latest example of the SEC clamping down on misleading and fraudulent ICOs, with several similar enforcement actions initiating and concluding in recent weeks. With regulators now increasingly determined to tackle this dubious corner of the crypto sector, it looks like time is running out for promoters of dodgy ICOs.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
The post ICO falsely claiming SEC approval faces lawsuit appeared first on Coingeek.
A cryptocurrency exchange in South Korea has been sued over its alleged price-pumping schemes that involves token issuance. According to ZDnet Korea, Aone, a South Korean law firm, filed a complaint against Cashierest operator Newlink Co. Ltd., claiming that the exchange’s token violated the capital markets laws in the country.
The lawsuit, filed last Oct. 5, alleged that Cashierest engaged in “criminal pumping, the so-called ‘cage pumping,’ which induces price increases while restricting the withdrawa” of its dividend coin called CAP,” according to the news outlet. Aside from paying dividends, CAP also offers rebates on transaction fees.
Aone claimed the crypto exchange was involved in two illegal acts: the first was “violation of the securities issuance procedure,” under Article 119 of South Korea’s Capital Markets Act. The second was violation Article 178, which prohibits unfair trading.
The token in question was first issued in August. CAP has three features—dividents, referral mining, and trade mining. Its whitepaper claimed that CAP investors “can receive 100% of profits of Cashierest’s exchange charges,” while charges issued with each currency (KRW, BTC, ETH, and TUSD) will be 100% refunded in applicable currency.
On its website, Cashierest explained that CAP “pays the first dividend in KRW,” and that 100% of Cashierest transaction fee revenue” will be paid “in proportion to the customer’s CAP reserves by two snapshots a month.”
Aone claimed these, along with the other features listed on the Cashierest website, violate South Korean laws.
It seems Cashierest is not the only exchange involved in these illegal activities. According to Money Today, the law firm also plans to extend the lawsuit to include other exchanges such as Coinzest, Bithumb, and Coinbit.
Early this year, Cashierest made headlines after it was revealed that its users were allowed to withdraw up to five times their coin holdings due to a system glitch.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
The post South Korea’s Cashierest hit with lawsuit over price pumping schemes appeared first on Coingeek.
Shareholders of crypto mining and investing firm MGT Capital Investments, which has previous ties to John McAfee, have filed a class-action lawsuit against the company over allegations of a pump-and-dump scheme that manipulated the price of MGT shares.
The lawsuit comes on the heels of a U.S. Securities and Exchange Commission (SEC) probe into a stock-pumping scheme involving a group of 10 investors and corporate executives, including former MGT Capital CEO Robert Ladd, former Riot Blockchain CEO John O’Rourke, and billionaire Phillip Frost.
John McAfee, who served as executive chairman and CEO of MGT Capital until his resignation in August 2017, was not named in the SEC investigation. However, he was named a defendant in the class-action lawsuit filed by Rosen Law Firm on behalf of current and former MGT shareholders.
According to the lawsuit, the defendants failed to disclose that they “were engaged in a pump-and-dump scheme to artificially inflate MGT Capital’s stock price,” that the “illicit scheme caused MGT Capital to make false and misleading statements, which would result in governmental scrutiny, including from the SEC,” that “the illicit scheme would ultimately cause MGT Capital’s stock to become delisted from” the New York Stock Exchange, which means that their statements regarding MGT Capital’s business prospects “were materially false and misleading and/or lacked a reasonable basis at all relevant times.”
The suit is asking the court to order MGT Capital to pay damages to the shareholders who were affected by the alleged manipulation of MGT shares, as well as cover the plaintiff’s court costs, and award further relief to aggrieved parties.
Recently, CoinGeek reported that McAfee has ceased promoting ICOs due to threats from the SEC.
Though not explicitly named in the SEC order, the complaint indicated that the defendants used dishonest promotion and manipulative stock trading to drive up the price of MGT shares, enabling them to net more than $9.4 million in just two weeks. However, MGT tells CCN that the firm has the ‘utmost confidence’ that the suit is without merit and that it will be dismissed.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
The post McAfee-linked MGT Capital Investments faces lawsuit over pump-and-dump scheme appeared first on Coingeek.
