Customers are suing Compass Mining for more than $2 million, alleging fraud, after the company cut ties with Russian host Bit River and failed to return customers’ Bitcoin hardware, citing an unenforceable US penalty.
According to a January 17 court filing, Compass Mining issued a notice in April 2022 stating that it had terminated its “relationships and dealings with Bit River” due to penalties imposed by Executive Order 14024.
Compass allegedly “did not offer” to return or even recover assets entrusted by its customers to the company, which it hosted at Bit River facilities in Russia.
However, it has been argued that it is “wrong” that returning miners would violate Executive Order 14024, which prohibits dealings with sanctioned entities.
The court document noted that Compass had “the right and the obligation to bring about the return of miners to its customers.”
Compass representatives met customer concerns with hostility, saying it was “unable to conduct or even facilitate” any business with Bit River.
When its customers had no choice but to contact Bit River, the Russian company allegedly referred them to Compass. Bit River representatives responded to those who contacted them:
“From a legal point of view, Bit River’s contract is with Compass, and all equipment is owned by Compass. Therefore, you must address all concerns directly with Compass.”
The court document indicated that Compass should have disclosed to Bit River that it was “just an intermediary” and that the plaintiffs themselves had paid for and owned these machines.
The partnership with Bit River was originally planned to allow Compass customers to host their rigs on Bit River’s corporate premises to take advantage of Russia’s “low-cost, low-carbon, enterprise-class cryptocurrency mining facilities.”
The court document also stated that Compass’ promise of “95% uptime” for its devices was inaccurate, stating that in reality it “was closer to 50-60%”. In some cases, miners have not been online for weeks or months.
In July 2022, Compass was the first miner to announce job cuts amid the current crypto winter. The company laid off 15% of its staff, while senior executives and staff took significant salary cuts.