It has been over an year since the Bitcoin mining outfit HashFast Technologies announced bankruptcy, but the company is still continuing to stay at the nucleus of legal troubles.
The Bitcoin equipment manufacturer, which once rose to fame for its over-the-top advertising campaigns, was later beset by a number of legal allegations, including breach of contract and fraud. As widely reported, HashFast had launched a fake pre-order scheme, in which it had promised to ship its customers the fastest Bitcoin mining machines within two weeks. But in reality, the company’s “in stock” claim was a farce.
“HashFast was capitalized with a total of $641,643, a number that was totally inadequate to undertake production and development of bitcoin mining equipment (which would cost several millions of dollars),” a plaintiff’s 22-page complaint says, while claiming that the company’s owners wanted to utilize the collected funds to pay vendors and other third parties, who would have ultimately produced the machines.
The plaintiff who filed the aforementioned complain is Pete Morici. He claims to have paid HashFast around $11,000 for their specialized Bitcoin mining hardware, “BabyJets”. He also claims that — as promised by the owners — the delivery of the said machine was never made, nor the invested money was recovered.
Morici, thereby, sued HashFast’s CEO Eduardo deCastro and chief technology officer Simon Barber, in January 2014, alleging breach of contract and fraud. Another amended complaint was also filed in February 2015, in reply to which the defendants filed a motion of dismissal, saying that the plaintiff had failed to provide enough evidences to prove fraud.
Bitcoin Fraud Unproved
US District Judge Edward Davila supported Morici, saying that he has provided enough evidence in his second complaint which supports that the fraud has happened. As court reporter Philip A. Janquart reported, the judge recognizes that the plaintiff was misled on the shipping date, a factor important enough to be considered.
However, the judge also recognized that the HashFast CTO Barber was not directly involved in writing the content of the website. Thus, he cannot be individually charged until further evidences are brought to the light.
“With regard to restitution against Barber individually, plaintiff contends that Barber personally benefitted from the unlawful business practices by taking salary bonuses from the proceeds received on undelivered BabyJet orders,” Judge Davila stated. “Again, although the allegations may ultimately prove untrue, that determination must wait for another day.”
He continued: “Plaintiff’s allegations, however, do not support liability against Barber for statements describing whether BabyJets were ‘in stock.’”
In the same statement, Davila ordered to probe HashFast on the California’s Unfair Competition Law, saying that the plaintiff has provided sufficient evidences to prove false advertising campaigning by deCastro and Barber.
India-based IT professional Yashu Gola found Bitcoin in 2012, when he was trying to send money to one of his friends in the US. As he quotes, it was “love-at-first-sight” with the mystical work of digital currencies. He left his online advertising job to work as a full-time Bitcoin writer for forex news website ForexMinute.com. Apart from covering the minute-to-minute Bitcoin events, Yashu is also an active Bitcoin trader and analyst.When not working, he is found reading and writing movie scripts, poems and songs. He is also a passionate movie buff View all posts by Gola Yashu
The Bitcoin equipment manufacturer, which once rose to fame for its over-the-top advertising campaigns, was later beset by a number of legal allegations, including breach of contract and fraud. As widely reported, HashFast had launched a fake pre-order scheme, […]