Coinmints $150M Fraud Scheme Exposed: Shocking Details Inside

Coinmints $150M Fraud Scheme Exposed: Shocking Details Inside

New York crypto miner Coinmint alleges fraud and breach of contract in a lawsuit seeking over $23 million in damages against two semiconductor companies that set up an “elaborate deception” to lure the miner into a $150 million purchase agreement for bitcoin mining machines.

The mining company, which has been embroiled in plenty of legal battles, describes an elaborate fraud scheme for a $150 Million contract.

New York cryptocurrency miner Coinmint alleged two semiconductor corporations establish an “elaborate deception” to lure the miner into a $150 Million buy agreement, in a lawsuit seeking over $23 Million in damages.

Coinmint alleged that Bitcoin (BTC) technology company Katena Computing and semiconductor designer company DX Corr establish a scheme to convince it to buy up to $150 Million of Bitcoin (BTC) mining machines that Katena couldn’t and didn’t intend to deliver on, reports by a lawsuit filed with a court in California’s Santa Clara County Superior Court on Jan. 26.

Under the scheme, Katena “improperly influenced, bribed or incentivized co-conspirators,” including one unnamed individual within the mining company, for a $150 Million buy of Bitcoin (BTC) mining machines, Coinmint alleged.

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The lawsuit alleges fraud, breach of contract and fiduciary duty, likewise as aiding and abetting against DX Corr and its executives likewise as previous Coinmint employees. Coinmint is asking for “actual, compensatory and consequential damages, including but not limited to the $23 million,” that it deposited for the sale, likewise as punitive and exemplary damages.

“Katena is in binding arbitration concerning Coinmint’s breach of contract and is seeking damages caused by Coinmint’s failure to pay. Katena is eager to talk openly and factually in relation to this dispute but will honor the arbitration process and its confidentiality requirements. And once we can talk more openly, we will,” stated a spokesperson for Katena.

DX Corr filed a motion to dismiss the lawsuit earlier these 30 days, saying Coinmint didn’t sufficiently attract any states to facilitate its states against the semiconductor firm.

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Coinmint is no stranger to litigation. Its two cofounders fought over the firm’s ownership. Coinmint filed a complaint with the New York Public Service Commission against the utility of Plattsburgh, where it operates, to avoid paying a deposit related to its electricity use. It was likewise involved in a tax fraud case in Puerto Rico, where it is headquartered, that was settled under a confidentiality agreement, stated a source next to the matter.

Coinmint rejected the existence of the alleged tax fraud case and declined to comment on this story.

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

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DX Corr did not respond to CoinDesk’s request for comment.

Back in 2021, an unnamed Coinmint employee initiated conversations over the buy of equipment. “Katena engaged in an elaborate deception” to get Coinmint’s founder and CEO Ashton Soniat on board with [claims] that it ‘truly possessed a revolutionary chip design that would disrupt the Bitcoin (BTC) mining world,’” the lawsuit said.

The unnamed individual was the Coinmint chief financial officer at the time. Reports by a filing with the United States Securities and Exchange Commission and a LinkedIn, a individual named Michael Maloney was Coinmint’s CFO at the time. Maloney declined CoinDesk’s request for comment through LinkedIn.

Katena was dangling an offer for the position of CFO and equity as part of the plot to Maloney, stated the lawsuit.

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The then-CFO requested Katena to recommend a semiconductor expert to perform due diligence on the machines. On the other hand, Katena suggested Robert Bleck as an independent observer, despite the fact that he was in reality in collusion with DX Corr executive and Katena minority shareholder Sagar Reddy, Coinmint alleged. Bleck was Reddy’s “b***h,” the lawsuit read.

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

Soniat signed a sales contract in May 2021 which “obliged Coinmint to pay Katena $150 Million for miners without security or customary protection” reports by Katena.

Katena likewise used the contract to try to get financing from investors, including financing bank JP Morgan, stated the lawsuit.

And once the CFO left Coinmint, two other individuals took the role of convincing Soniat continuation sending deposit payments. The two were likewise planning a hostile takeover of Coinmint and sooner or  thereafter parted ways with the miner.

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Coinmint in the end sent deposit payments of $23.4 Million to Katena with no contractual protections and allegedly received nothing.

Nikhilesh De.


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