The aftermath of the tumultuous Bitcoin Cash hard fork has hit the courts after Florida-based United American Corp. filed a suit against some of the biggest names in the cryptocurrency market, accusing them of manipulation of the Bitcoin Cash network during and after the Nov. 15 hard fork.
According to a press release, Unitedcorp UAMA, +10.75% alleges that parties including Bitmain, Bitcoin.com, Roger Ver and the Kraken exchange engaged in “unfair methods of competition” that were detrimental to UnitedCorp and other stakeholders.
“We are bringing this suit on behalf of UnitedCorp because we believe strongly in the value and integrity of democratic, distributed and decentralized blockchain networks which will become more important with time,” said Benoit Laliberte, president of UnitedCorp, in a press release. “In order to maintain confidence in cryptocurrencies such as Bitcoin Cash, no person or entity can be allowed to control them.”
The Nov. 15 hard fork came about after a disagreement of the scheduled protocol upgrade that was to include a minor change to how transactions were ordered. The success of each new coin was to be determined by the amount of hash power — the computing power to mine a cryptocurrency — that miners contributed to each network.
However, during the split, UnitedCorp said a number of entities took control of the network using “rented hashing”— the process of artificially deploying computing power to a network — to favor the adoption of Bitcoin ABC.
“It is clear that’s what supposed to be a democratic process was not, it was hijacked by the ABC camp,” said Lawry Trevor-Deutsch, VP of Corporate Affairs at UnitedCorp in a call with MarketWatch, adding it was clear the parties took control of more than 50% of the network during the upgrade.
UnitedCorp alleges Ver colluded with Jihan Wu of Bitmain to reallocate Bitmain servers from the Bitcoin Core network. “The above described actions were intentional and clearly planned in advance, with Bitmain organizing deployment (or actually redeployment) of up to 90,000 Bitmain Antminer S9 servers in early November,” according to court documents. Bitmain is the largest manufacturer of bitcoin mining hardware.
Since the Nov. 15 hard fork, Bitcoin Cash BCHUSD, -13.98% has fallen more than 73% to $116, an all-time low. Over the same period, bitcoin, BTCUSD, -3.61% the world’s largest cryptocurrency, has fallen around 35%.
MarketWatch has not yet received replies to requests for comment from Kraken, Bitmain or Bitcoin.com.