Crypto miner Gryphon Digital is seeking to have a lawsuit brought against it by its former partner Sphere 3D dismissed. The lawsuit stems from a spoofing attack in which 26 Bitcoins were transferred to a fraudulent address. In April, Sphere 3D filed a complaint alleging that Gryphon CEO Rob Chang wired 18 BTC to a fraudster posing as Sphere 3D’s CFO through a spoofing attack. Another eight Bitcoins were sent to the same address, resulting in a loss of over $500,000 at the time.
However, Gryphon claims to be a victim of Sphere’s “gross negligence” that allowed a malicious actor to access Sphere’s computer system and send spoof emails from its domain. Gryphon argues that Sphere’s lack of care with respect to the safeguarding, security, and control of its technology systems resulted in Gryphon mistakenly sending the cryptocurrency intended for Sphere to the attacker. Court documents filed by Gryphon on Aug. 18 state, “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”.
A spoofing attack occurs when a hacker pretends to be a trusted entity to deceive a system or user. These scams can manifest across various platforms, such as email or IP addresses, and often aim for unauthorized access, data theft, or redirection of malicious activity.
During the litigation, Sphere 3D’s CEO, Patricia Trompeter, accused Gryphon of putting the company’s assets at significant risk and willfully violating their contractual duties. In response, Gryphon has not only sought to dismiss the allegations related to the asset transfer but has also filed counterclaims against Sphere 3D for breach of contract, negligence, and defamation.
This lawsuit is the latest development in a partnership that initially began in August 2021, with Gryphon managing Sphere 3D’s crypto mining activities. The two companies had plans to merge under the Gryphon brand, but these plans fell apart, and they mutually decided to scrap the merger in April 2022.
Cointelegraph reached out to Sphere 3D for comment but did not receive an immediate response.