Bitcoin Miner Blockware Accused Of Fraud
- Blockware Solutions has been accused by a client of breach of contract, negligence, deceptive trading, and fraud.
- The lawsuit against Blockware was filed in a US federal court on December 17. In the lawsuit in question, the complaint filed by the plaintiff is about the sale of Blockware Solutions 50 mining rigs to Faes & Co. for $525,000.
- Faes stated that Blockware does not actually own or operate a facility to house mining equipment and does not have the ability to do so reliably.
Blockware Solutions, a provider of Bitcoin mining hardware and hosting, is being sued by a client for breach of contract, carelessness, dishonest business practices, and fraud.
The claim that Blockware sold Faes & Co. 50 mining rigs for $525,000 is at the crux of the action, which was instituted on December 17 in U.S. federal court for the Northern District of Illinois.
London-based Faes claimed that it placed the purchase in January, when Bitcoin mining was incredibly profitable amidst a bull market, for the machines to be shipped and hosted in Blockware’s own facilities. Only in April did the rigs go online, according to Faes. As of October, the machines had an average uptime of 70% rather than the claimed 100%.
Faes said in the lawsuit:
“Blockware did not actually own or operate a facility to host the miners and was not capable of doing so reliably. As a result, Faes’ miners under Blockware’s management and control have experienced prolonged downtime and inoperability due to lack of power, resulting in significant loss of revenue.”
Faes claims that operational problems began as soon as the machines were online and that they finally became nonoperational in October. According to the lawsuit, Blockware was advertising 100% uptime on a 90-day status page before the machines went offline, despite a Pennsylvania location, where Faes’ rigs were frequently situated, not functioning.
Additionally, the suit claims that the facilities held by third parties that Blockware could access lacked dependable power, leading to inferior service. Faes asserted that it had sustained losses of at least $250,000.
Mason Japp, CEO of Blockware, responded as follows:
“We disagree with all statements and claims made by Christian Faes. He attempted to coerce us to settle with him, and we believe we owe him $0. In fact, we will be countersuing him for defamation among other stipulations. We had a signed [nondisclosure agreement] on file. We have a very strong case, his filing has baseless/false claims and after filing he still offered to drop the case if we settled (once again coercion). We believe the main reason for his filing was the value of his rigs dropped in price and he has harassed us with personal threats weekly via text/other communications until filing this lawsuit. We are confident it will be tossed out from the court, we have honestly served this industry for over 5.5 years and this has been first filed a lawsuit against us.”
At least two retail-focused mining companies have been accused of having operating issues this year, and Blockware is the second. After business problems in July, Compass Mining‘s CEO and CFO both left their positions.
Due to high energy expenses and poor Bitcoin values, well-known cryptocurrency mining companies like Compute North and Core Scientific have found themselves in bankruptcy procedures.
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