Bitmain, Bitcoin.com, Kraken Sued for Allegedly Manipulating Bitcoin Cash's Hard Fork

Bitmain, Bitcoin.com, Kraken Sued for Allegedly Manipulating Bitcoin Cash's Hard Fork
Omar Faridi
  • United American Corp, an IT services firm, has alleged that Bitcoin ABC team manipulated BCH hard fork.
  • It has filed a suit against Roger Ver, Bitcoin.com, Kraken exchange, and Bitmain for "colluding" and using "rented hashpower" to unfairly take over the BCH network.

United American Corp (“UnitedCorp”), a Miami, Florida-based telecommunications and IT firm, announced on December 6 that it has “launched a lawsuit for damages and injunctive relief” against Bitcoin.com, Roger Ver, digital asset exchange Kraken, and crypto mining hardware giant Bitmain.

UnitedCorp also mentioned in its press release that it had filed alaw suit for damages against “other individuals” who may have been involved in “a well-planned scheme to take control of the Bitcoin Cash network.”

According to the US-based IT management firm, the accused wanted to gain control of the BCH blockchain “for personal gain.” This led to “a global capitalization meltdown of the Bitcoin Cash network at the expense of others,” UnitedCorp has alleged.

Manipulating The BCH Network

Court documents submitted in the US District Court for the Southern District of Florida state that:

The defendants collectively engaged in unfair methods of competition and through a series of unconscionable, deceptive and unfair practices, manipulated the Bitcoin Cash network for their benefit and to the detriment of UnitedCorp and other Bitcoin Cash stakeholders.

UnitedCorp’s management believes “the defendants colluded to effectively hijack the Bitcoin Cash network after the November 15, 2018” hard fork upgrade to the cryptocurrency platform's network. The IT firm also alleged the accused wanted to “centralize” the cryptocurrency’s network, which may be considered a “violation” of the Bitcoin protocol - as outlined in its whitepaper.

UniteCorp’s press release further noted that the firm is seeking “injunctive relief” against the defendants to “prevent them from continuing ongoing actions against the Bitcoin Cash network and to prevent them from doing so in the future.” UnitedCorp is also seeking “compensatory damages with a quantum to be determined at trial.”

"Against All Priniciples Of Blockchain"

The IT firm alleges those who were backing the Bitcoin ABC chain “took control of the Bitcoin Cash network immediately after the November 15th” hard fork “against all principles and protocols of the blockchain” via “rented hashing.” As described by UnitedCorp, “rented hashing” was the process of “artificially and temporarily deploying or redirecting computer power to take control of the network and [then intentionally] used this computer power to favor the adoption of the Bitcoin ABC" version of the updated BCH codebase.

Moreover, the firm believes other versions of the BCH network upgrades would have “maintained more democratic rule sets.” Going on to describe what it considers highly manipulative practices from those trying to hard fork to the Bitcoin ABC chain, UnitedCorp noted that once ABC’s rule sets were “established as the dominant chain, ‘the rented hashing’ was withdrawn and was no longer contributing to the Bitcoin Cash network.”

"Human Manipulation", "Planting A Poison Pill"

UnitedCorp also alleged these actions may be considered “human manipulation” and that it was done to intentionally “decentralize the autonomous network.” On Novermber 20, ABC’s developers used “Deep Reorg Prevention” to control the Bitcoin Cash ledger, a process which UnitedCorp described as “planting a poison pill.” 

Commenting on the situation and the suit, Benoit Laliberte, the president of UnitedCorp, remarked:

We are bringing this suit on behalf of UnitedCorp because we believe strongly in the value and integrity of democratic, distributed and decentralized blockchain networks which will become more important with time. In order to maintain confidence in cryptocurrencies such as Bitcoin Cash, no person or entity can be allowed to control them.