In both cases, Biofuel claims, the companies shipped equipment from China to its hosting facility in eastern Kentucky and then walked away with the bitcoins produced, leaving behind 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 it has not received the amount owed to it under the contract.
As a result of the still unresolved dispute with VCV, Biofuel received permission from the Martin County District Court in Kentucky to sell mining equipment, Whites claims, in order to recover some of the funds owed to him (the amount he did not confirm), but maintains that no compensation has yet been awarded. He claims that VCV has stopped responding to communications.
Biofuel it has since disbandedput out of business by failed hosting ventures. “I literally lost my home, I lost everything. It ruined me financially,” says Wes Hamilton, former CEO of Biofuel Mining. “I’m just really frustrated with this whole thing.”
WIRED reached out to VCV and Touzi for comment but received no response.
There are several options for financial recovery for companies like Mohawk and Biofuel. The situation is more complex, as in the case of Mohawk, if he is dealing with the so-called special purpose companies. Because they are set up by their parent companies for one specific business venture, these entities do not have to worry about their long-term ability to operate in the US.
“It certainly may be more difficult to recover damages from a non-U.S. contractor,” 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 U.S. will simply ignore this matter.”
Even if the owners of the Kentucky facility win in court, it may be complex to recover the damages awarded. “A judgment is basically a piece of paper. Every judgment must be converted into an asset or cash to be valuable,” Havlin says. If the opposing party refuses to pay and has no U.S. assets from which to collect, sometimes this is not possible.
Nearly a year after the litigation began, the Mohawk case remains stuck in legal limbo. To Mohawk’s defeat, the presiding judge recently denied his motion to dismiss HBT’s complaint on the grounds that it did not sufficiently substantiate its argument. The judge also pushed Mohawk’s lawsuit into arbitration, a forum for resolving disputes privately instead of in public court. Non-U.S. parties prefer arbitration as a way to “remove the home forum from both sides,” Havlin explains. “You can choose an arbitration venue in any country to create neutral playing conditions.” A parallel hearing in federal court is scheduled for December to consider the possibility of imposing an injunction on Mohawk preventing the sale of remaining HBT equipment in its possession.