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Gryphon Digital Mining wants to prevent Sphere 3D from using $10 Million settlement money from Core Scientific.
On March 25, a new legal action was filed by Gryphon Digital Mining seeking to block $10 Million from a recent settlement with Core Scientific by Bitcoin miners, Sphere 3D.
Gryphon has filed a pre-motion letter with the U.S. District Court for the Southern District of New York, requesting permission to file a motion for prejudgment attachment, to secure $10 million in equity proceeds that Sphere recently received from a settlement related to Core Scientific’s bankruptcy exit.
The Story Goes Back to August 2023
At the end of August, Gryphon Digital rejected the allegations made by its former partner, Sphere 3D, in a lawsuit. Moreover, a lawsuit was filed against Gryphon Digital for the attack that resulted in the transfer of approximately 26 Bitcoins (BTC $26,086) to a false address.
According to the documents filed by Sphere 3D in April, Rob Chang, Gryphon’s CEO, reportedly transferred 18 Bitcoins (BTC) in January to a fake account impersonating Sphere 3D’s chief financial officer. Moreover, eight more Bitcoins were supposedly transferred to the same address after a few days. As per Cointelegraph, the total loss is estimated to be over $500,000.
A crypto media highlighted that “Sphere’s lack of attention regarding the protection, security, and control of its technology systems resulted in Gryphon sending over $500,000 worth of bitcoin to a hostile threat actor
The Accusations on Sphere
Sphere is accused of violating the exclusivity clause of their agreement with Gryphon, by entering into at least four hosting agreements with other providers.
According to Gryphon’s letter, based on Sphere’s annual report to the Securities and Exchange Commission, the pre-motion letter is filed to ensure Sphere’s financial health. The possibility of bankruptcy has been publicly acknowledged by the company, indicating that it may not be able to meet future judgments.
Gryphon aims to ensure that adequate funds are available to fulfil any judgment it may receive as a result of Sphere’s alleged violation of the contract. Moreover, this has caused damages amounting to at least $30 Million.
Sphere is Burning Funds
Sphere’s latest earnings report from March 13 shows that the company’s net loss for 2023 was $23.4 Million. However, this is much less when compared to $192.8 Million the previous year, as the crypto winter hit miners.
Gryphon and Sphere have been partners since August 2021 and even considered merging under the Gryphon brand. However, in April 2023, Sphere sued Gryphon after an alleged spoofing attack led to the irregular transfer of Bitcoin.
As per allegations, Gryphon CEO Rob Chang fell victim to a spoofing attacker masquerading as Sphere 3D’s chief financial officer in January 2023, resulting in the transfer of 18 Bitcoins. Moreover, a few days later, eight more BTC were sent to the same address. At the time, Gryphon claimed to be a victim of Sphere’s “gross negligence” that allowed activities from malicious actors.
Conclusion
Gryphon has filed a letter to request permission for a motion for prejudgment attachment to secure $10 Million in equity proceeds recently received by Sphere. The two companies were partners before Sphere sued Gryphon over an alleged spoofing attack that led to the irregular transfer of Bitcoin.
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks, cryptos or related indexes comes with a risk of financial loss.
Adarsh Singh is a true connoisseur of Defi and Blockchain technologies, who left his job at a “Big 4” multinational finance firm to pursue crypto and NFT trading full-time. He has a strong background in finance, with MBA from a prestigious B-school. He delves deep into these innovative fields, unraveling their intricacies. Uncovering hidden gems, be it coins, tokens or NFTs, is his expertise. NFTs drive deep interest for him, and his creative analysis of NFTs opens up engaging narratives. He strives to bring decentralized digital assets accessible to the masses.
