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Crypto Clash: Gryphon vs. Sphere Legal Battle

Martin Walker
Aug 21, 2023 at 10:45 am

Gryphon Digital, a prominent player in the cryptocurrency mining realm, finds itself entangled in a legal tussle of considerable significance. The lawsuit, which it is currently endeavoring to quash, was brought against it by its former partner, Sphere 3D. The crux of the matter revolves around a cunningly orchestrated spoofing attack, a cyber gambit that culminated in the misappropriation of 26 Bitcoins (BTC) equivalent to $25,960, adding a somber note of financial loss to the narrative.

As the legal chronicle unfolds, it's Sphere 3D's assertion that takes center stage. Their initial filing in the month of April paints a picture where Gryphon's CEO, Rob Chang, purportedly transferred a substantial sum of 18 BTC to an imposter posing as Sphere 3D's Chief Financial Officer, skillfully manipulating the guise of a spoofing attack. This was swiftly followed by a sequence of events leading to a further eight Bitcoins being directed to the same fraudulent destination, collectively inflicting a wound of over half a million dollars in monetary terms.

Gryphon, however, mounts a defense grounded in a narrative of negligence on the part of Sphere 3D. The stance posited by Gryphon pivots on the concept of "gross negligence," contending that it was the flimsy safeguards and porous security measures employed by Sphere 3D that paved the way for an unauthorized intrusion. This intrusion subsequently facilitated the sending of counterfeit emails, deftly maneuvering Gryphon into channeling cryptocurrency meant for Sphere 3D directly into the coffers of malevolent actors.

The courtroom saga takes an intriguing twist with court documents filed on August 18. Gryphon counters the allegations with a fervent assertion of its own. The company points an accusatory finger at Sphere 3D, asserting a striking trifecta of breach of contract, negligence, and defamation. The legal rigmarole, it's worth noting, stands as a testament to the multifaceted nature of modern business alliances.

 Gryphon Digital's legal submission against Sphere 3D dated August 18th, sourced from the U.S. District Court for the Southern District of New York.
Gryphon Digital's legal submission against Sphere 3D dated August 18th, sourced from the U.S. District Court for the Southern District of New York.

What adds a layer of complexity to the unfolding drama is the backdrop of an earlier partnership. This alliance, birthed in the warmth of August 2021, was the fertile ground for Gryphon to take the reins of Sphere 3D's "crypto mining activities." This seemingly promising cooperation carried whispers of a merger, the convergence of the two entities under the Gryphon banner. However, the currents of time proved tumultuous, and the once-harmonious merger plans met their demise in April 2022, allegedly by way of a consensual decision.

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