Judge Approves Fraud Claims Against Bitcoin Mining Firm HashFast

A US District Judge has approved claims against bankrupt bitcoin mining company HashFast and two of its officers.

Judge Edward Davila, responding to a motion to dismiss filed by the defendants, sided with plaintiff Pete Morici by approving the claim that HashFast violated the Unfair Competition Law (UCL) – which prohibits "acts or practices which are unlawful, or unfair or fraudulent" – and additional allegations of fraud.

Morici alleges that he purchased two Baby Jets – bitcoin mining hardware devices – worth $11,200 of bitcoin from HashFast but failed to receive his order as promised and was not offered a satisfactory refund.

The order signed by the judge read:

"Based on the foregoing discussion, the court finds that Plaintiff has sufficiently pled a UCL claim against Barber. The court also finds the fraud claim sufficient insofar as it is based on statements Barber made regarding the Baby Jet shipping date and the availability of refunds in bitcoin."

However, Davila, dismissed claims against Barber for statements that described whether the Baby Jets were in stock.

Venkat Balasubramani, Morici's lawyer told CoinDesk the lawsuit would now proceed to complete the period of discovery and deposition, and if necessary, trial.

When reached, attorney Jeremy Gray of Zuber Law, which originally represented HashFast in the suit, said that it had not represented the bankrupt company "for a long time" and declined to comment further.

Long battle

The plaintiff filed suit against the HashFast Entities and its officers Simon Barber and Eduardo deCastro last year, submitting a complaint for breach of contract and fraud.

Speaking to CoinDesk at the time, deCastro said that HashFast's delays were due to a series of problems encountered in the ASIC production process. Contention at the time also revolved around the fact that the disgruntled bitcoin miners were requesting that their refunds be paid out in bitcoin.

HashFast was granted Chapter 11 bankruptcy protection in June last year. Prior to that, the company let go of many of its staff in a seeming attempt to remain solvent.

Gavel image via Shutterstock.