Customers of Compass Mining have sued the firm after it failed to return their Bitcoin mining machines after it severed ties with BitRiver, a Russian hosting company. The aggrieved customers are now seeking up to $2 million in damages from the digital asset mining firm for failing to retrieve customers’ assets placed in its care.
According to the court filing with the United States District Court for The Southern District of Florida, the firm is accused of breach of contract, negligence, and fraud after it ended its partnership with BitRiver.
While citing the sanctions imposed by Executive Order 14024, Compass Mining terminated its relationship and agreement with BitRiver earlier in April 2022. However, the customers have argued that the returning of the machines does not violate Executive Order 14024 which forbids dealings with a sanctioned entity.
As per familiar sources, the customer’s attempt to reach out to Compass was met with hostility. Also when these aggrieved customers reached out to BitRiver, they were instead redirected to Compass Mining as the Russian hosting firm insist its agreement was with Compass and all equipment is owned by Compass, hence the civil class action lawsuit.
Initially, Compass’ partnership with the Russian hosting firm was intended to allow its customers to leverage “enterprise-grade, low-cost and low-carbon cryptocurrency mining facilities in Russia” and host their machines in BitRiver’s facility.
Compass Mining Experience Several Challenges
The Proof-of-work mining hardware company has come a long way with its simple idea to assist everyone to mine Bitcoin (BTC). The firm has also been through a lot of opposition ranging from delays in deployment, and downtime issues to stuck mining rigs in Russia.
Recall that the company laid off 15% of its employee last year along with a significant compensation as well as spending reduction across the rest of its employees and operations. In a similar vein, Compass shut down operations in its Georgia site which hosts about 5,000 machines for its clients.
The digital asset mining firm also experienced a series of resignations from its top executives. The CEO and co-founder of the firm, Whitney Gibbs together with the Chief Finance Officer Jodie Fisher have both resigned.