Gryphon Digital seeks court dismissal of Sphere 3D’s lawsuit

Crypto miner Gryphon Digital is seeking dismissal from a lawsuit brought by its former partner Sphere 3D over a spoofing attack that resulted in 26 Bitcoins (BTC) being transferred to a fraudulent address.

According to the initial complaint filed by Sphere 3D in April, Gryphon CEO Rob Chang allegedly wired 18 BTC in January to a fraudster posing as Sphere 3D’s chief financial officer through a spoofing attack. Within a few days, eight more Bitcoins were sent to the same address, resulting in a total loss of over $500,000 at the time.

Gryphon claims, however, to be a victim of Sphere’s “gross negligence” that allowed a malicious actor to access Sphere’s computer system, send spoof emails from its domain, and cause Gryphon to send cryptocurrency intended for Sphere to the attacker.

“Sphere’s complete and utter lack of care with respect to the safeguarding, security, and control of its technology systems resulted in Gryphon sending over $500,000 worth of bitcoin to the hostile threat actor, which Gryphon has been unable to recover”, reads court documents filed on Aug. 18.

A spoofing attack is when a hacker pretends to be a trusted entity to deceive a system or user. This kind of scam can occur across various platforms, such as email or IP addresses. The goal is often unauthorized access, data theft, or malicious activity redirection.

In a previous statement about the litigation, Patricia Trompeter, CEO of Sphere 3D, stated that “Gryphon has put the Company’s assets at significant risk and willfully violated their contractual duties.”

In addition to dismissing allegations related to the transfer of assets, Gryphon has also filed claims against Sphere 3D for breach of contract, negligence, and defamation. The lawsuit is the latest stage in a partnership that began in August 2021, with Gryphon managing Sphere 3D’s “crypto mining activities”. Back then, the two companies planned to merge under the Gryphon brand. The plans, however, rapidly eroded, and they scrapped the merger in April 2022, claiming it was a mutual decision.

Cointelegraph reached out to Sphere 3D, but did not receive an immediate response.

Magazine: $3.4B of Bitcoin in a popcorn tin — The Silk Road hacker’s story