A number of plaintiffs are seeking more than $5 million, claiming the maker of cryptocurrency mining equipment used customers’ devices to mine coins for itself.
A Los Angeles resident, Gor Gevorkyan, is the lead plaintiff among more than 100 in the class-action who assert the Chinese company took advantage of them during the setup of its application-specific integrated circuit (ASIC) mining devices.
“Until the complicated and time-consuming initialization procedures are completed, Bitmain’s ASIC devices are preconfigured to use its customers’ electricity to generate crypto currency for the benefit of Bitmain rather than its customers,” the plaintiffs’ lawyers wrote in a filing in federal court in the Northern District of California.
The suit accuses Bitmain of engaging in an “unfair business practice,” thus causing the plaintiffs to, among other things, lose money.
Bitmain is on target to generate more than $10 billion in revenue this year and has filed for a public listing on the Hong Kong Stock Exchange. But in the escalating trade war between the U.S. and China, the company is likely to incur stiff tariffs on its equipment – a result of the U.S. Trade Representative reclassifying the technology.
And there could be other problems coming for the Chinese exchange. For instance, after reports that it would participate in Bitmain’s forthcoming IPO, at least one prominent investment group, Temasek, denied it was participating.
“Temasek is not an investor in Bitmain, and has never had discussions with, or an investment in, Bitmain,” the company said. “News reports about our involvement in [its] IPO are false.”