The Allegations
Gryphon Digital, a crypto miner, is fighting to be dismissed from a lawsuit filed by its former partner, Sphere 3D. The legal action stems from a spoofing attack that resulted in 26 Bitcoins (BTC) being transferred to a fraudulent address.
The Initial Complaint
In April, Sphere 3D filed a complaint claiming that Gryphon CEO, Rob Chang, had mistakenly wired 18 BTC to a fraudster impersonating Sphere 3D's chief financial officer. Shortly after, an additional eight Bitcoins were sent to the same address, resulting in a loss of over $500,000 at the time.
Gryphon's Defense
Gryphon argues that it is actually a victim of Sphere 3D's "gross negligence." They claim that Sphere's lax security measures allowed a malicious actor to gain access to their computer system, send spoof emails, and trick Gryphon into sending cryptocurrency intended for Sphere to the attacker.
"Sphere’s lack of care with 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," court documents state.
The Nature of a Spoofing Attack
A spoofing attack occurs when a hacker pretends to be a trusted entity to deceive a system or user. This type of scam can happen through email or IP addresses and is often used to gain unauthorized access or steal data.
Gryphon's Counterclaims
In addition to seeking dismissal of the transfer of assets allegations, Gryphon has filed claims of its own against Sphere 3D. The counterclaims include breach of contract, negligence, and defamation.
The Partnership and Merger Plans
Gryphon and Sphere 3D entered into a partnership in August 2021, with Gryphon managing Sphere 3D's crypto mining activities. The companies had plans to merge under the Gryphon brand. However, the merger was abandoned in April 2022, with both parties citing it as a mutual decision.
At the time of writing, Sphere 3D has not responded to requests for comment.
