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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Sphere 3D Acquires Exclusive Rights To Hertford Advisor’s Bitcoin Mining Agreements

Sphere 3D will reportedly have the right to assume Hertford’s bitcoin mining agreements through six months.

Data management company Sphere3D has acquired exclusive right to assume all of Hertford Advisors’ bitcoin mining agreements throughout six months, reported MarketWatch.

The firm has reportedly already started taking action. It said it has assumed and executed the first agreement to purchase 60,000 new bitcoin mining rigs. The deal was completed directly with the manufacturer, Sphere said, and deliveries are expected to begin in November 2021 and continue over the following ten months.

As part of the deal, Sphere3D will issue common stock shares to Hertford. Additionally, a new series of preferred stock shares will also be issued upon achieving a set of milestones.

The set of milestones include the ability of Sphere 3D to assume a couple more contracts. The first would reportedly entitle the firm to negotiate and purchase 160,000 additional miners. In contrast, the second would give Sphere 3D the right to negotiate a long-term contract for a 200,000 square foot bitcoin mining facility.

If purchased and completed, the mining facility could reportedly provide Sphere 3D with up to 1 gigawatt of carbon-neutral power, as well as 1 gigawatt of power from the grid as backup.

The company didn’t provide details on the transaction value. But based on the 4.5 million shares it will issue to Hertford once the milestones are achieved and Sphere 3D’s closing price on Thursday, that would amount to $15.5 million.

In June, the data management firm announced it had entered into an agreement and plan of merger with Gryphon Digital Mining, a privately-held bitcoin mining company. The union, which would change Sphere 3D’s name to Gryphon’s, would be finalized in Q4 2021. In July, Gryphon bought 7,200 bitcoin mining rigs for $48 million.


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