SAN JOSE, Calif. (CN) – A manufacturer specializing in bitcoin computer hardware cannot duck claims it lured consumers into paying for equipment that did not yet exist, a federal judge has ruled.
Plaintiff Pete Morici, a bitcoin “miner,” says he paid the equivalent of about $11,000 for specialized hardware, called “BabyJets,” used to mine the digital currency.
He says the defendants knew they could not meet the promised delivery dates but lied about it, hoping to raise enough money from online sales to complete development and manufacturing of the hardware.
Morici sued HashFast Technologies, HashFast LLC, CEO Eduardo deCastro and chief technology officer Simon Barber, alleging fraud and breach of contract.
“HashFast was capitalized with a total of $641,643, a number that was totally inadequate to undertake production and development of bitcoin mining equipment (which would cost several millions of dollars),” according to Morici’s 22-page complaint. “However, Barber and deCastro sought to solicit customer orders for bitcoin equipment, and using the funds received from customers, pay vendors and other third parties who would ultimately produce the machines. Barber and deCastro caused HashFast to engage in an extensive marketing campaign promising delivery of BabyJet machines by dates certain, knowing that they could not meet the delivery deadlines for the machines.”
Morici sued the defendants in January 2014, filing an amended complaint in February 2015. The defendants filed a motion to dismiss the following month, arguing the plaintiff failed to plead a sufficient claim for fraud.
U.S. District Judge Edward Davila explained that “the shipping date was important to plaintiff because ‘bitcoin mining computers lose their value at a rapid rate due to the fact that more powerful computers are needed to effectively ‘mine’ for bitcoins as time goes on.”
He said Morici provided sufficient evidence in his second amended complaint
Originally appeared at: http://www.courthousenews.com/2015/08/17/bitcoin-babyjet-claims-survive-dismissal-bid.htm