Gryphon Digital Mining Moves to Bar Sphere 3D from Accessing Core Scientific Settlement Funds

Gryphon Digital Mining has filed a legal motion to prevent Sphere 3D from using $10 million in settlement funds received from Core Scientific. Gryphon alleges that Sphere violated the exclusivity clause of their agreement and seeks to secure these funds to ensure Sphere's financial health, as the company has acknowledged the possibility of bankruptcy.

Gryphon Digital Mining seeks to Bar Sphere 3D from Accessing $10 Million Settlement Funds

New York, March 25, 2023 - Gryphon Digital Mining has filed a legal motion seeking to prevent Bitcoin mining company Sphere 3D from using $10 million in settlement funds from Core Scientific. The move comes as part of an ongoing dispute between the two companies.

Background of the Dispute

In August 2023, Gryphon rejected allegations made by Sphere 3D in a lawsuit, claiming that it had violated an exclusivity agreement by entering into hosting contracts with other providers. Sphere, in turn, accused Gryphon of negligence, alleging that it failed to protect its systems, leading to the loss of approximately 26 Bitcoins.

Gryphon's Pre-Motion Letter

Gryphon has filed a pre-motion letter with the U.S. District Court for the Southern District of New York, requesting permission to file a motion for prejudgment attachment. This would allow the company to secure $10 million in equity proceeds that Sphere recently received from its settlement with Core Scientific.

Gryphon's Claims

Gryphon alleges that Sphere is violating the exclusivity clause of their agreement and has caused damages amounting to at least $30 million. The company argues that the attachment is necessary to ensure that there are sufficient funds available to satisfy any judgment that may be awarded in its favor.

Sphere's Financial Health

According to Sphere's annual report to the Securities and Exchange Commission, the company's net loss for 2023 was $23.4 million, a significant decrease from the previous year's loss of $192.8 million. However, Gryphon argues that the possibility of bankruptcy has been publicly acknowledged by Sphere, indicating that it may not be able to meet future judgments.

Partners Turned Adversaries

Gryphon and Sphere have been partners since August 2021 and even considered merging under the Gryphon brand. However, their relationship soured after the alleged spoofing attack in January 2023.

Quotable Quotes

"Gryphon is taking this action to protect its interests and ensure that Sphere is held accountable for its alleged breaches of contract," said a Gryphon spokesperson.

"We believe that Gryphon's claims are without merit and we will vigorously defend against this motion," said a Sphere spokesperson.

Conclusion

The outcome of this legal battle remains to be seen. However, Gryphon's move to secure $10 million in settlement funds from Sphere indicates that the company is determined to pursue its claims vigorously. As the case progresses, further details and developments are likely to emerge.