Cryptocurrency mining giant Bitmain is facing a class action lawsuit for over $5 million that alleges unauthorized crypto mining by the firm.
On Nov. 19, lead plaintiff Los Angeles County resident Gor Gevorkyan filed the case against both Bitmainâs China- and U.S.-based entities in the federal court of the Northern District of California, alleging that the firmâs devices use customersâ resources to mine cryptos for its own benefit prior to full setup.
âUntil the complicated and time-consuming initialization procedures are completed, Bitmainâs ASIC [Application-Specific Integrated Circuit] devices are preconfigured to use its customersâ electricity to generate crypto currency for the benefit of Bitmain rather than its customers,â reads the filed complaint seen by CoinDesk.
The document indicates there are more than 100 class members involved in the action and that the aggregate amount under debate âexceeds $5,000,000, exclusive of interest, fees, and costs.â
Gevorkyan said that he purchased Bitmain ASIC devices, including the AntMiner S9, in January of this year to mine bitcoin. However, he faced difficulties configuring the devices and it took time to install them.
âDuring this time, the ASIC devices were pre-configured to mine and deliver crypto currency to Defendant. Also during this time, the ASIC devices operated at full power mode, consuming a substantial amount of electricity at Plaintiffsâ expense,â the complaint states.
It further adds that this âunfair business practiceâ by Bitmain continued until the ASIC devices were linked with Gevorkyanâs personal cryptocurrency account.
As a result, Gevorkyan and the other members are seeking âfull restitution of all expenses incurred as a result of Bitmainâs unfair and deceptive practicesâ and an order requiring Bitmain to âcease the acts of unfair competition allegedâ, as well as interest at the highest rate allowable and other fees and costs.
In summary, the complaint said:
âConveniently, Bitmain cashes in on every second it takes to get the ASIC configured with the customersâ specifications and lays the substantial costs of operating the ASIC devices at the feet of its customers.â
âBitmain does not mine with customersâ equipment and, considering that mining for itself is a small part of Bitmainâs business, it has less incentive to do so compared to shipping the equipment as soon as possible to fulfill any confirmed orders,â the firm said in an email to CoinDesk.
Earlier this month, Bitmain itself filed a suit against an anonymous thief in a U.S. federal court who allegedly stole 617 bitcoin from an account it holds at crypto exchange Binance.
Editorâs note: This story has been updated to include comment from Bitmain.
Gavel and bitcoin image via Shutterstock