Sphere 3D Sues Gryphon Digital Mining Over Alleged Spoofing Attack

Sphere 3D has filed a lawsuit against its partner, Gryphon Digital Mining, over an alleged spoofing attack that led to the irregular transfer of Bitcoin. The complaint, filed on April 7, accuses Gryphon’s CEO, Rob Chang, of wiring 18 BTC to a fraudster posing as Sphere 3D’s chief financial officer in January. The lawsuit also claims that another eight Bitcoin were sent to the same address a few days later.

In a spoofing attack, an attacker falsifies data, such as IP addresses, email headers, or user credentials, to trick a system or a user into believing that they are someone else. This can give the attacker access to a system, sensitive information, or enable them to launch further attacks.

Sphere 3D CEO, Patricia Trompeter, said in a statement for investors that Gryphon had materially breached the Master Services Agreement (MSA) the companies had entered into. Trompeter accused Gryphon of “willfully violating their contractual duties” and putting Sphere 3D’s assets at significant risk.

According to the statement, Gryphon manages Sphere 3D’s “crypto mining activities” and maintains “fiduciary duties of Sphere’s digital assets.” In return for this work, Gryphon receives 22.5% of Sphere’s gross profit as payment.

The relationship between the companies, which were once considering a merger, appears to have deteriorated. Trompeter’s statement suggests that the lawsuit was filed because Sphere 3D would not be “bullied or threatened by the likes of Gryphon.” She added that Gryphon had failed to act with integrity and to honor their contract, and that Sphere 3D would hold them accountable.

Gryphon has not yet responded to the complaint. A spokesperson for the company said that they could not comment on pending litigation but were confident that their response to the complaint and the evidence that would come to light in the aftermath would speak for themselves.

The incident highlights the risks associated with spoofing attacks and the importance of maintaining robust security protocols. The outcome of the lawsuit will be closely watched by those in the cryptocurrency industry as it may have implications for how partners manage and secure digital assets.

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Crypto Miner Sphere 3D Sues Partner over Alleged Bitcoin Spoofing Attack

In a statement for investors, Sphere 3D CEO Patricia Trompeter announced that the company has filed a lawsuit against Gryphon Digital Mining, its partner in charge of managing its crypto mining activities and maintaining the fiduciary duties of Sphere’s digital assets. According to Trompeter, Gryphon has materially breached the Master Services Agreement (MSA) the two companies entered into, and has put the company’s assets at significant risk.

The lawsuit stems from an alleged spoofing attack that occurred on January 18, 2022. The complaint alleges that Gryphon CEO Rob Chang wired BTC to a fraudster posing as Sphere 3D’s chief financial officer. The complaint also states that another eight Bitcoin were sent to the same address a few days later. A spoofing attack occurs when an attacker attempts to trick a system or user into believing that they are someone else through falsifying data, such as IP addresses, email headers, or user credentials, to gain access to a system, steal sensitive information, or launch further attacks.

Sphere 3D and Gryphon Digital Mining have been partners since August 2021. Gryphon is responsible for managing Sphere 3D’s crypto mining activities and maintaining the fiduciary duties of Sphere’s digital assets. In return, Gryphon receives 22.5% of Sphere’s gross profit.

The relationship between the two companies appears to have deteriorated significantly. Trompeter’s statement suggests that the companies were once considering a merger. She also noted that the filing demonstrates that Sphere 3D will not be bullied or threatened by Gryphon. Trompeter stated that Gryphon has failed to act with integrity, failed to honor their contract, and that Sphere 3D will hold them accountable.

In conclusion, the lawsuit filed by Sphere 3D against Gryphon Digital Mining highlights the risks associated with the custody and management of digital assets. Spoofing attacks are a significant threat to the security of digital assets, and companies must take proactive steps to protect themselves and their clients from such attacks. As the crypto industry continues to evolve and grow, the need for robust security measures and contractual agreements that protect both parties will become increasingly important.

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Gryphon Digital Mining Cancels to Go Public via Reverse Merger with Sphere 3D

Gryphon Digital Mining, a privately held company that focuses on Bitcoin mining, announced Monday that it would not be going public through a reverse merger with Sphere 3D, a publicly-traded data management company.

Sphere 3D is dedicated to becoming a leading carbon-neutral Bitcoin mining firm operating at an enterprise scale.

After careful consideration by both management teams and their respective boards of directors, both Gryphon and Sphere 3D came into an agreement to terminate the deal “due to changing market conditions, the passage of time, and the relative financial positions of the companies, among other factors.”

However, the companies said they will continue their partnership through what they formed in the past, commonly known as the ‘Master Services Agreement (MSA).’ Under the MAS arrangement, Gryphon will generate additional operating income through the management of Sphere 3D’s mining fleet, while Sphere 3D to leverage Gryphon’s expertise in Bitcoin mining.

Rob Chang, the CEO at Gryphon Digital Mining, talked about the development and said: “As a pending shareholder and operating partner of Sphere 3D, we look forward to the mutual success of both companies. With a substantial unlevered total hashrate from our self-mining and MSA operations, Gryphon is well-positioned as it already ranks among the leading bitcoin miners in the world.”

In June last year, Gryphon and Sphere 3D announced the merger plan initially scheduled to take place at the end of the third quarter of 2021. However, the firms pushed back the plan to take place in the fourth quarter because of a complicated regulatory approval process. The companies went further and postponed the timeframe to the first quarter of 2022.

Under the arrangement, Sphere 3D Corp could have merged with Gryphon and changed its name to Gryphon Digital Mining, Inc. Sphere would have issued 111 million shares worth about $193.1 million to Gryphon shareholders as merger consideration. Sphere 3D and Gryphon shareholders would have owned 23% and 77% of Gryphon Digital Mining, respectively. Rob Chang, the CEO of Gryphon, who previously served as CFO of Bitcoin miner Riot Blockchain, would have become CEO of the combined company. The board would have comprised seven directors, including two of Sphere 3D’s board members.

 

Image source: Shutterstock

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Gryphon Mining Buys 7,200 Bitcoin Mining Rigs For $48 Million

Bitcoin mining company in the making Gryphon has announced an agreement to purchase 7,200 Antminer S19J Pro for $48 million from Bitmain.

Bitcoin mining company in the making Gryphon Digital Mining has announced it has agreed to purchase 7,200 Antminer S19J Pro bitcoin mining rigs from Bitmain Technologies for an aggregate price of $48 million.

“We are happy to provide Gryphon with Bitmain’s latest next-gen miners, the Antminer S19J Pro,” said Irene Gao, Antminer sales director of North, Central and South American regions at Bitmain. “We are confident that Gryphon will continue to expand their business and provide reliable and low-cost mining. We look forward to our continued cooperation with them in the future as they expand their operations.”

The agreement terms stipulate that Bitmain will deliver 600 miners every month to the mining company, with the first batch to be delivered in August 2021. Furthermore, the machines to be delivered are the latest model from Bitmain, scheduled to be released this summer. According to the announcement, the rig boasts a maximum hash rate of 100 terahashes per second (TH/s), an energy efficiency ratio of 29.5 joules per TH. The machines are expected to last for around five years.

Once Gryphon receives and deploys all 7,200 machines, it will enjoy a combined total of 720,000 TH/s, or 0.72 exahashes per second (EH/s), of hashing power. If the agreement is actualized and the company fully deploys the machines, Gryphon would be positioned, in present terms, among the 15 largest bitcoin miners worldwide. The company’s 0.72 EH/s would lead it to becoming the 13th biggest BTC miner, ahead of EMDCPool’s 0.7 EH/s hash rate power.

Gryphon’s order agreement joins other recent purchases in the space. Last week alone, Hut 8 Mining Corporation announced a $44 million acquisition of over 11,000 mining rigs, and bitcoin mining company in the making TeraWulf ordered 30,000 machines from Bitmain. Additionally, Gryphon has reportedly already partnered with a data center to access electricity costs as low as $0.013/kWh to power its mining operation plans.

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Gryphon Raises $14 Million For Zero-Carbon Bitcoin Mining Operation

According to a release, Gryphon Digital Mining has raised $14 million in a Series A fundraise for the launch of a zero-carbon footprint Bitcoin mining operation.

“At Gryphon, our long-term strategy is to be the first vertically integrated crypto miner with a wholly-owned, 100 percent renewable energy supply,” said Rob Chang, CEO of Gryphon Digital Mining, per the release. “Our vision is to further develop and use economically viable, renewable, off-grid energy.”

The announcement noted that institutional investors made up more than 30 percent of the Series A and it closed in a little over two weeks. It also noted that Gryphon has partnered with a data center that grants it access to electricity costs as low as $0.013 per kilowatt hour (kWH). At launch, it expects its mining operation to have 730 petahashes per second (PH/s) of processing power which it thinks can grow to more than 2,000 pH/s by the end of the year.

The release did not detail the specific energy sources that Gryphon expects to leverage, but it did position the firm as one that sees opportunity in fueling the practice through green energy.

“Gryphon has the opportunity to become a market leader by providing reliable, low-cost mining while relying on renewable energy to minimize Bitcoin mining’s carbon footprint,” according to the release.

While there is a popular belief that bitcoin mining is a waste of energy that unduly contributes to issues like climate change, projects like this are demonstrating that Bitcoin mining can actually incentivize and drive use of renewable energy sources.

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