An aggrieved group of customers has taken legal action against Compass Mining, a company specializing in cryptocurrency mining, alleging fraud and seeking over $2 million in damages.
The customers claim that the company failed to return their Bitcoin mining machines after cutting ties with a Russian hosting company, Bit River. The customers allege that Compass Mining used a non-applicable United States sanction as an excuse for not returning their machines.
According to the customers, they had signed a contract with Compass Mining to host their Bitcoin mining machines at Bit River’s facilities in Russia. However, the company unexpectedly terminated its contract with Bit River and failed to return the customer’s machines.
The customers claim that Compass Mining cited a non-applicable United States sanction for their inability to return the machines, which they believe is a fraudulent excuse.
The court document filed on the 17th of January states that in April 2022, Compass Mining notified its customers that the company had terminated its “relationships and dealings” with Bit River, a Russian hosting company, due to the sanctions imposed by Executive Order 14024.
The court document also revealed that Compass Mining had used the sanctions imposed by Executive Order 14024 as a pretext for terminating the contract. The company claimed that the sanctions prohibited it from doing business with Bit River, which is why it could not return the customers’ machines.
However, the customers claim that the sanctions do not apply in this case and that Compass Mining has used it as an excuse to avoid returning the machines.
In the court document, it was also alleged that Compass did not make any move to return the mining machine entrusted to it by its customers.
However, in July 2022, Compass Mining made headlines as the first mining company to announce significant job cuts amid the ongoing crypto market downturn, commonly referred to as the “crypto winter.”
The company’s decision to lay off 15% of its employees was a response to the challenging market conditions and the need to reduce costs to remain financially viable.
The job cuts were not the only measures taken by Compass Mining to weather the crypto winter. In addition to the layoffs, the company’s top executives and staff took major pay cuts to reduce costs further.
This decision was made to ensure the company’s long-term sustainability and mitigate the impact of the market downturn on its financial health.
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