The “premeditated hostile takeover” of the BCH network in 2018 still haunts Bitmain, its co-founder Jihan Wu, and his “team of conspirators”—Roger Ver, ABC developer Amaury Sechet, Kraken, and its CEO, Jesse Powell—even until today.
Last January 28, lawyers for the Bitmain and Ver camp appeared before the U.S. District Court of the Southern District of Florida to argue for the dismissal of the lawsuit filed by Florida-based blockchain company United American Corp. (UAC) in 2018. The court rejected the defendants’ motion to dismiss without prejudice and granted UAC leave to amend so that their counsel could file an amended complaint to address defects raised by the defendants. The court also denied Bitmain’s motion to dismiss for failure to properly serve summons.
Lawyers for Ver, Cox and Chancellor argued that implementing checkpoints in the BCH software code, among other things, resulted in two chains and in effect, increased competition—therefore “there were no antitrust issues to be evaluated.” However, Magistrate Judge Chris McAliley asked if those actions by the ABC group and its cohorts were now preventing future changes in consensus rules.
Judge McAliley also questioned Kraken’s role in “defining the cryptocurrency market,” grilling the exchange’s lawyer on the economic basis for delisting Bitcoin SV (BSV). Kraken’s lawyer claimed the exchange “was obliged to disclose to their clients that it believed there was a lack of liquidity in the BSV market which required the immediate delisting of BSV”—an argument that the court shot down on grounds that the so-called “lack of liquidity” appeared to be the case not just for BSV, but for other cryptocurrencies traded on Kraken as well.
Put simply, the court wanted to know if Kraken would have benefited from delisting BSV “thereby discouraging trading of BSV just after the hard fork.”
UAC has 30 days to submit an amended complaint to address several issues that the court brought up.
First antitrust action in US involving crypto
Launched in December 2018, the UAC lawsuit is the first antitrust action brought in the United States involving the cryptocurrency industry. The Miami-based company accused the Bitmain, Ver and others of fraud and market manipulation, stating that the group colluded to stage a premeditated hostile takeover of the BCH network during the November 2018 hash war. This resulted in BCH becoming centralized, violating “all accepted distributed and decentralized standards and protocols associated with Bitcoin since its inception.”
The Florida company, which has been involved in blockchain innovation since 2017 and has invested over $4 million in the space, said the selfish maneuvering of development group ABC has completely altered the “fundamental economics of the business.”
The ABC camp forced changes on the BCH blockchain, introducing arbitrary checkpoints that allow Sechet and ABC to take over the network. According to UAC, “Combining this change with the hashing power of Bitcoin ABC backers amounts to centralization. They will be able to override any consensus reached by the rest of the network, forcing other to conform or create an unwanted hard fork.” Read the full filing here.
Who are the defendants?
The scheme was allegedly spearheaded by Bitmain, which publicly acknowledged its support of ABC during the hash war, as well as Bitcoin.com and its CEO, Roger Ver.
Aside from renting hash power and deploying 90,000 of Bitmain’s own mining rigs in favor of ABC mining operations, Jihan Wu also allegedly unloaded BTC to fund the ABC operations and drove the prices of crypto down.
Ver, who has also directed the mining operations of Bitcoin.com’s mining pool to ABC, has direct links to Kraken crypto exchange via its founder Jesse Powell. Kraken was the first exchange to declare that ABC was offering the true version of BCH.
Also named in the UAC lawsuit were Sechet and other ABC developers Shammah Chancellor and Jason B. Cox.
Bitmain is already being investigated in the United States over its connections with BitClub, whose founders are facing charges of offering unregistered securities in the country. The probe has allegedly prompted the mining company to cancel its IPO attempt in the U.S. Rumors that are making the rounds include that BitClub hash was used by Bitcoin.com in furtherance of their takeover of the BCH ticker symbol during the Hash War. Roger Ver is also rumored to have very close links to the BitClub group as well. Story developing.
There is one positive event that took place on November 15, 2018: Bitcoin SV (BSV) emerged to restore and free Satoshi’s original vision for Bitcoin. The BCH camp forked off the original Bitcoin protocol when it introduced significant code changes, and BSV became the new ticker symbol for the original Bitcoin protocol—an event now known as Bitcoin Independence Day.
The Genesis protocol upgrade on February 4, 2020 is a monumental step in the history of Bitcoin, and will see BSV returned as close as possible to the original protocol as envisioned by Satoshi Nakamoto. Visit the Genesis Hard Fork page to learn more.
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