Benzinga- SBI Crypto Co.a subsidiary of Japanese company SBI Holdings Inc, filed a lawsuit against United Statesa data center based in Rockdale, Texas.
Lawsuit accuses Whinstone of misrepresenting his will to host large-scale event Bitcoin (CRYPTO:BTC) mining and for causing millions of dollars in damage due to delays and substandard conditions.
In the lawsuit, SBI Crypto accused Whinstone of “fraud, fraudulent inducement of contract, fraud by non-disclosure, negligent bonding and breach of hosting service contract.”
The lawsuit was filed in the United States District Court for the Western District of Texas, Waco Division.
SBI Crypto signed an agreement with Whinstone in October 2019, in which the latter had assured the Bitcoin miner to “secure for commercial access up to one (1) gigawatt of aggregate electricity that can be delivered to the Data Center, including a part of which may be gradually offered to [SBIC]."
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However, according to the lawsuit, Whinstone had not obtained the gigawatt of power for its Rockdale facility and only began signing power contracts "just before operations began in the summer of 2020."
SBI Crypto also alleges that Whinstone never delivered on its promise to deliver 20,000 mining machines to the site, dropping from a fleet of 16,200 in September 2020 to 14,600 in April 2021.
The lawsuit further accuses Whinstone of failing to comply with industry standards and failing to notify SBI Crypto that building permits, certifications and power contracts were required for the facility to fulfill its part of the hosting service contract.
In June 2021, a representative from SBI Crypto inspected the site and found the mining machinery to be in substandard condition.
The machines had "high levels of dust buildup and corrosion" and were not fitted with dust filters, contrary to what Whinstone had informed SBI Crypto.
SBI Crypto is seeking millions of dollars in damages from Whinstone US for alleged misrepresentations and substandard terms that resulted in significant financial loss to the company.
Winstone US, which was acquired by Riot Blockchain (NASDAQ: RIOT) in May 2021 for $11.8 million in common stock and $80 million in cash, has yet to respond to the lawsuit.
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