Coinmint sues California chipmaker for $23 million, alleging elaborate deception

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New York-based crypto miner Coinmint has alleged that two semiconductor companies staged an elaborate deception to lure the miner into a $150 million purchase deal, in a lawsuit seeking over $23 million in damages.

Coinmint alleged that bitcoin technology company Katena Computing and semiconductor design firm DX Corr set up a scheme to convince it to buy up to $150 million worth of bitcoin mining machines that Katena could not and did not intend to deliver, according to a lawsuit filed in a Santa Clara County Superior Court in California on January 26.

As part of the scheme, Katena improperly influenced, bribed or instigated co-conspirators, including an unnamed individual within the mining company, for a $150 million purchase of bitcoin mining machines, Coinmint alleged. .

The lawsuit alleges fraud, breach of contract and fiduciary duty, and complicity against DX Corr and its officers as well as former employees of Coinmint. Coinmint seeks actual, compensatory, and consequential damages, including but not limited to the $23 million it deposited for the sale, as well as punitive and exemplary damages.

Katena is in binding arbitration regarding Coinmints’ breach of contract and is seeking damages caused by Coinmints’ failure to pay. Katena is eager to speak openly and factually about this dispute, but will respect the arbitration process and its confidentiality requirements. When we can talk more openly, we will, a spokesperson for Katena said.

DX Corr filed a motion to dismiss the lawsuit earlier this month, saying Coinmint had failed to submit enough claims to support its claims against the semiconductor company.

Coinmint is no stranger to litigation. Its two co-founders fought over ownership of the company. Coinmint filed a lawsuit with the New York Public Service Commission against the Plattsburgh utility, where it operates, to avoid paying a bond related to its electricity usage. She was also involved in a tax evasion case in Puerto Rico, where she is headquartered, which was settled under a confidentiality agreement, a source familiar with the matter said.

Coinmint denied the existence of the alleged case of tax evasion and declined to comment for this story.

Court records show that the municipality of San Juan sued Coinmint in March 2022, and a judge known for his tax expertise was assigned to the case. The court did not respond to CoinDesk’s request for a lawsuit at the time of publication.

DX Corr did not respond to CoinDesks’ request for comment.

In 2021, an anonymous Coinmint employee started conversations about purchasing equipment. Katena engaged in an elaborate deception to onboard Coinmints founder and CEO Ashton Soniat with [claims] that he truly possessed a revolutionary chip design that would disrupt the Bitcoin mining world, the lawsuit alleges.

The anonymous individual was the chief financial officer of Coinmint at the time. According to a filing with the United States Securities and Exchange Commission and a LinkedIn, a person named Michael Maloney was the CFO of Coinmints at the time. Maloney declined CoinDesk’s request for comment via LinkedIn.

Katena was dangling an offer for the position of chief financial and equity officer in connection with the conspiracy against Maloney, the lawsuit heard.

The then CFO asked Katena to recommend a semiconductor expert to perform due diligence on the machines. But Katena suggested Robert Bleck as an independent observer, even though he was actually in collusion with DX Corr executive and Katena minority shareholder Sagar Reddy, Coinmint claimed. Bleck was Reddys b***h, the lawsuit reads.

Bleck misrepresented Katenas’ semiconductor design and production capabilities to Coinmint’s CFO, who then tried to convince CEO Soniat.

Soniat signed a sales contract in May 2021 that required Coinmint to pay Katena $150 million for miners without security or customary protection according to Katena.

Katena also used the contract to try to secure funding from investors, including investment bank JP Morgan, the lawsuit said.

When the CFO left Coinmint, two other people took on the role of convincing Soniat to continue sending deposits. The two were also planning a hostile takeover of Coinmint and eventually parted ways with the miner.

Coinmint ultimately sent $23.4 million in installments to Katena without contractual protections and reportedly received nothing.

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