Sphere 3D’s legal issues escalate as Gryphon seeks to block $10M
The legal battle between Bitcoin miners Sphere 3D and Gryphon Digital Mining reached another chapter on March 25, when a new legal action sought to block a recent $10 million settlement.
In a pre-filing letter Gryphon filed with the U.S. District Court for the Southern District of New York, the miner requested permission to file a pre-judgment attachment motion, seeking $10 million in equity proceeds that Speer recently received in connection with the deal. Exit to the Core Scientific Bankruptcy.
Gryphon wants to ensure that the funds are available to satisfy any judgment it may receive as a result of Sphere's alleged breach of contract, with damages of at least $30 million. Sphere is accused of violating the terms of their agreement with Gryphon by entering into at least four hosting agreements with other providers.
Behind the pre-action letter is Sphere's financial health. According to Griffon's letter based on Sphere's annual report, the company has publicly acknowledged its potential for bankruptcy, suggesting it may not be able to meet future judgments.
“Over the past four months, Speer has shown growing financial difficulties. In the year In a Nov. 28, 2023, filing in Core's bankruptcy action, Speer's counsel acknowledged that the company was operating at a net loss of $200 million and that recent losses had dwarfed earnings by a two-to-one margin.
According to Spear's latest earnings report from March 13, the company's net loss for 2023 was $23.4 million, compared to $192.8 million last year, as miners were hit by the crypto winter.
The companies have been partners since August 2021 and even intend to merge under the Gryphon brand. However, in April 2023, Sphere first accused Gryphon of a fraud attack that led to illegal transfers of Bitcoin.
In the year In January 2023, Gryphon CEO Rob Chang was allegedly defrauded by sending 18 bitcoins (BTC) to an attacker posing as Sphere 3D's chief financial officer. A few days later, eight more BTC were sent to the same address. At the time, Gryphon said he was the victim of Sphere's “gross negligence” in allowing malicious actors.
In addition to denying the allegations related to the transfer of property, Gryphon also filed claims against Sphere 3D for breach of contract, negligence and defamation. The partnership was terminated in October 2023.
Cointelegraph reached out to Sphere 3D, but did not receive an immediate response.
Magazine: MakerDAO plans to bring back ‘DeFi summer' – Rune Christensen
