In both cases, Biofuel claims, the companies shipped equipment from China to their hosting facilities in eastern Kentucky and then left with the bitcoin produced, leaving hundreds of thousands of dollars in unpaid energy bills and hosting fees.
Biofuel reached a settlement with Touzi in early 2022 for $60,000, but despite returning the mining equipment, it claims to have not received the sum owed to it under the agreement.
In the still unresolved dispute with VCV, Biofuel received permission from the Martin County Circuit Court in Kentucky to sell the mining equipment, Whites claims, to recover a portion of the funds owed to it (he has not confirmed the amount). , but claims that no damages have yet been awarded. VCV has stopped responding to communications, he says.
Biofuel has since been dissolvedruined by failed hosting companies. “I literally lost my house, I lost everything. It ruined me financially,” says Wes Hamilton, former CEO of Biofuel Mining. “I’m very frustrated by the whole thing.”
WIRED reached out to VCV and Touzi for comment but did not receive a response.
There are few financial recovery options for companies like Mohawk and Biofuel. The situation becomes more difficult, as in the Mohawk case, if these are so-called special purpose entities. Because they are created by their parent companies for a single specific business, these entities need not worry about their long-term ability to operate in the United States.
“It certainly can be more difficult to recover damages from a non-U.S. counterparty,” says Kim Havlin, a partner in the global commercial litigation practice at law firm White & Case. “There is certainly a risk that an entity that does not need to be in the United States will simply ignore the case.”
Even if Kentucky facility owners win in court, it could be difficult to collect any damages. “A ruling is essentially a piece of paper. Any judgment must be converted into assets or cash to be valuable,” Havlin says. If the opposing party refuses to pay and has no US assets to collect against, sometimes that is not possible.
Nearly a year after the dispute began, the Mohawk case is stuck in legal limbo. In a setback for Mohawk, the presiding judge recently denied its motion to dismiss HBT’s complaint, on the grounds that it had not sufficiently supported its argument. The judge also took Mohawk’s counterclaim to arbitration, a forum for resolving disputes privately rather than in public court. Non-U.S. parties tend to prefer arbitration as a way to “eliminate an internal forum for both parties,” Havlin explains. “An arbitration seat cannot be chosen in either country as a means of creating a neutral playing field.” A parallel hearing is scheduled in federal court in December to consider whether an injunction should be imposed on Mohawk, preventing it from selling the rest of the HBT equipment in its possession.