This is another class action about shady business practices related to cryptocurrencies, this time Siacoin and Decred. Most of the complaint covers broken promises about mining equipment, but the legal allegations center on the charge of the sale of unregistered securities.
The class for this action is all persons or entities who bought SC1 or DCR1 miners from the defendants in this case, between June 1, 2017 and the present. There is also a California subclass comprised of California residents who bought the miners during the same period.
The defendants in this case—Nebulous, Inc., its subsidiary Obelisk, Inc., and the companies’ executive officers—invented the Sia Platform, which purportedly allows those who need file storage space to get it from others with underutilized hard drive capacity. It claimed to offer “a more reliable and affordable offering when compared to traditional cloud providers.” Siacoin was intended as a cryptocurrency to facilitate the storage space rental via the Sia Platform.
Siacoin could only be generated through mining. The complaint says, “The mining process involves competing with other miners to solve complicated mathematical problems with cryptographic hash functions. The first Siacoin miner to crack the code is rewarded with Siacoin.” Solving these problems requires specialized “mining hardware.”
In June 2017, the defendants offered to provide such hardware, beginning with its SC1 with a hash rate of 100 GH/s. The hash rate is critical to profitability, the complaint says, because it increases a miner’s chances of solving the problem and being rewarded. A presale was held for the first batch of mining appliances, due to be shipped in June 2018 at the latest, although the defendants said they hoped to ship much earlier than that.
In November 2017, they added presales for Decred mining called DCR1, also slated for delivery in June 2018 at the latest. In November as well, they raised their estimates of speed to 800 GH/s for the SC1 and 1500 GH/s for the DCR1.
To make a long story short, the defendants failed to deliver on their promises. When the first batches of mining appliances were available, the SCR1’s hash rate was only 400 GH/s and the DCR1’s was 900 GH/s. They also did not ship on time. When would-be users asked for a refund, the defendants freely admitted they did not have the money to give refunds to everyone.
The complaint alleges that the presales of mining appliances were sales of unregistered securities, because the buyers were investing money in hopes of making a profit. They allege violations of Massachusetts laws against unfair and deceptive practices and unfair competition for the presales of the mining appliances, but they also claim that violations of Massachusetts and California laws against the sale of unregistered securities.
Article Type: LawsuitTopic: Consumer
Most Recent Case Event
Obelisk Siacoin and Decred Mining Equipment Presale Complaint
December 28, 2018
This is another class action about shady business practices related to cryptocurrencies, this time Siacoin and Decred. Most of the complaint covers broken promises about mining equipment, but the legal allegations center on the charge of the sale of unregistered securities.
obelisk_cryptocurrency_mining_compl.pdfCase Event History
Obelisk Siacoin and Decred Mining Equipment Presale Complaint
December 28, 2018
This is another class action about shady business practices related to cryptocurrencies, this time Siacoin and Decred. Most of the complaint covers broken promises about mining equipment, but the legal allegations center on the charge of the sale of unregistered securities.
obelisk_cryptocurrency_mining_compl.pdf