Is Mining Equipment a Security? Bitcoin Mining Case Moved to Arbitration

The court in the Roberts v. Obelisk, Inc. case has granted a motion to compel arbitration, according to a report by The Block Crypto. The ongoing case (Roberts v. Obelisk, Inc., 2019 U.S. Dist. LEXIS 72065 (D.Cal., 18-cv-2898-LAB, April 29, 2019) [SDP]) involves determining whether or not bitcoin mining equipment should be considered securities, which would make the sale of bitcoin mining equipment subject to security laws and unfair marketing laws.

Unfortunately, because the court has compelled arbitration, we are unlikely to ever obtain a firm ruling from the court on the issue. We will not have a ruling on whether or not mining equipment is a security. Instead, that issue will be resolved by an arbitrator.

Obelisk Delivered Miners Late, Failed to Live Up to Hashrate Promises

In recent proceedings, the court explained that:

“Obelisk offered pre-orders for two types of miner, the SC1 and the DCR1. Because the miners boasted high ‘hash rates,’ individuals involved in the cryptocurrency mining industry (including the Plaintiffs) believed these units would be more profitable than existing miners.”

The defendant, Obelisk, had previously moved to dismiss the case for lack of personal jurisdiction. In spite of that attempt, however, the court found sufficient contacts to satisfy the court’s jurisdiction even though the defendants were out of state.

Obelisk is accused of selling crypto miners that failed to meet promised specifications. Obelisk is also accused of shipping the units late.

When customers demanded a refund, Obelisk refused. In January 2019, the customers filed a putative class action lawsuit in state court in California, and that case was moved to federal court. Now, as of May 3, the case is headed to arbitration.

The Case Could Have Established an Important Precedent

The case deals with the issue of whether or not the sale of mining equipment that fails to meet promised specifications is a violation of state securities and unfair…

Source Link