Bitmain Sues Unknown Hacker For Alleged Theft Of $5.5 Million

Mining rig manufacturer Bitmain has filed a lawsuit against an unknown suspect who supposedly hacked into the company’s Binance (cryptocurrency exchange) account. The court documents — the lawsuit was filed in Seattle, Washington — refer to the suspect as 'John Doe' who stole specifically bitcoins from the account. As a result of the fraud, Bitmain recorded the damages — amount to be proven at trial — of about $5.5 million.

"Plaintiff Bitmain brings this action against the as-yet-to-be-identified 'John Doe' thief who stole valuable Bitcoin (BTC) from Bitmain through unauthorized hacking/access into online accounts. Bitmain seeks to identify the person responsible and hold them accountable," the court document read.

According to the lawsuit, Bitmain lost 617 bitcoins April 22. This was when bitcoin price was about $8,935. At that time the hacker used the funds to increase the price of a lesser known cryptocurrency called decentraland (MANA) and pump and dump other less significant cryptocurrencies. It is said that the reason for targeting MANA was because Doe was already holding around 2.3 million MANA on a personal account on Bittrex.

The suspect reportedly placed purchase orders from Bitmain’s digital wallet offering to buy MANA “and other digital assets” with Bitmain’s bitcoins at a price that was “far above the going market rate.”

“Before the unauthorized trades on April 22, 2018, Bitmain’s digital wallet held approximately 890 BTC — After the unauthorized trades, Bitmain’s digital wallet had approximately 265 BTC,” the document explained.

After facilitating the pump and dump, the hacker then transferred the stolen funds to Bittrex, a Seattle-based cryptocurrency exchange, in order to manipulate more markets. The court documents further read: "By means of such conduct, John Doe furthered the intended fraud and obtained things of value, specifically Bitcoin and other digital assets, causing a loss to Bitmain exceeding $5,500,000."

The filing was made in Washington because the law firm Perkins Coie L.L.P — representing Bitmain — believes the stolen funds ultimately landed in an account held in Bittrex. The law firm also believes that John Doe's illegal access and scheme to defraud was across state lines and this was accomplished using the Internet "which is used in interstate and foreign commerce and communications." The lawsuit, therefore, claimed that the Washington court has jurisdiction over the matter, and the laws that would be applied include the Computer Fraud and Abuse Act, the Washington Cybercrime Act, and other computer fraud laws.

Neither Binance nor Bittrex are being sued and are not suing. It’s not uncommon to sue John Doe in the U.S. as the suspect is known as a fictitious defendant. A "John Doe lawsuit" usually intends to uncover the identity of the fictitious defendant by using the court to ultimately uncover Doe’s name and location.