Bitcoin Miner Sphere 3D Rejects Gryphon’s Complaint Of Financial Doubts: ‘Worrying’
Bitcoin miner Sphere 3D has denied reports of financial problems, saying allegations from its former partner Gryphon Digital Mining are “very unsound”.
In a court document shared with Cointelegraph, Spear 3D denied the allegations filed by Gryphon in the United States District Court for the Southern District of New York a few days ago. economic collapse”
On March 25, Gryphon requested court leave to file a motion seeking to recover $10 million in equity it recently received from Sphere in connection with Core Scientific's bankruptcy exit. According to Gryphon, the move was necessary because Speer failed to pay about $30 million in future contract judgments.
On the other hand, Sphere 3D says it has $45 million in assets and $5 million in liabilities in its 2023 annual report. “A $30 million judgment could be entered against Sphere tomorrow and will have the means to pay it,” the document says. The company accused Gryphon of unreasonably duplicating its processes, including a counterclaim that was later dropped.
Due to the collapse of the market, crypto miners faced a harsh winter between 2022 and 2023. According to a source familiar with the matter, Gryphon's move to get $10 million from Sphere may be related to his own financial problems.
“Since April 2023, it's been back and forth. […] they [Gryphon] They have $18 million in assets and $27 million in debt, which means they have negative working capital of $9 million. […] Moreover, according to their loan agreement, it appears that each of them will be obligated to pay off their loans in Anchorage with the excess income they generate,” the source said.
Violation of the MSA
Prior to their legal dispute, Gryphon and Sphere were bound by a Master Services Agreement (MSA) through 2021, in which Gryphon served as the sole management service provider for Sphere's blockchain and cryptocurrency operations. Gryphon manages certain digital assets for Sphere, which the company sells on a per-order basis.
In the year The relationship broke down in April 2023 when Sphere took legal action against Gryphon following alleged misconduct that led to the transfer of 26 Bitcoins (BTC) to a malicious actor. Gryphon argued that it was the victim of Sphere's “gross negligence” for the security breach.
Gryphon also alleged that Sphere breached its contract by entering into four hosting agreements without Gryphon's consent. Sphere argued that it was permitted to enter into contracts with third parties under the MSA and in independent discussions with Gryphon. Sphere contends that any violations are minor “technical violations” and do not justify the substantial damages Gryphon is seeking.
RELATED: Sphere 3D legal issues escalate as Gryphon seeks $10M freeze
Sphere 3D is seeking $25 million in damages
Speer is seeking more than $25 million in damages from Gryphon for failing to provide proof of claim in Core Scientific's bankruptcy case.
Sphere provided a $35 million deposit for Core Hosting Services, but provided about $1 million in services. After Core declared bankruptcy, Speer eventually settled with Core for $10 million in restructured equity.
Sphere's critical issue was Gryphon's contract with Core. This led to a complex situation in which Core argued that Sphere was not directly involved, complicating Sphere's efforts to obtain the deposit. This situation was further exacerbated by Griffon's failure to file its claim in Core's bankruptcy case by the deadline.
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