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Crypto miner Gryphon Digital is pursuing the dismissal of a lawsuit initiated by its former partner Sphere 3D concerning a spoofing attack that led to the transfer of 26 Bitcoins (BTC) to a fraudulent address.
As per the original complaint lodged by Sphere 3D in April, Gryphon CEO Rob Chang purportedly transferred 18 BTC in January to a scammer impersonating Sphere 3D’s chief financial officer via a spoofing attack. Shortly thereafter, an additional eight Bitcoins were sent to the same address, culminating in a total loss exceeding $500,000 at that time.
However, Gryphon asserts that it is a victim of Sphere’s “gross negligence,” which permitted a malicious actor to infiltrate Sphere’s computer system, dispatch spoof emails from its domain, and lead Gryphon to send cryptocurrency meant for Sphere to the perpetrator.
“Sphere’s complete and utter lack of care regarding the protection, security, and management of its technological systems resulted in Gryphon transferring over $500,000 worth of bitcoin to the hostile threat actor, which Gryphon has been unable to retrieve,” states court documents submitted on Aug. 18.
Gryphon Digital’s court submission on Aug. 18 against Sphere 3D. Source: U.S. District Court Southern District of New York.
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A spoofing attack occurs when a hacker masquerades as a trusted entity to mislead a system or user. This type of scam can take place across various platforms, including email or IP addresses. The objective is often unauthorized access, data theft, or the redirection of malicious activities.
In a prior statement regarding the lawsuit, Patricia Trompeter, CEO of Sphere 3D, remarked that “Gryphon has placed the Company’s assets at considerable risk and willfully breached their contractual obligations.”
In addition to seeking the dismissal of claims related to the asset transfer, Gryphon has also lodged claims against Sphere 3D for breach of contract, negligence, and defamation. This lawsuit represents the latest development in a partnership that commenced in August 2021, with Gryphon overseeing Sphere 3D’s “crypto mining operations.” Initially, the two companies intended to merge under the Gryphon brand. However, those plans quickly deteriorated, and they abandoned the merger in April 2022, citing a mutual decision.
Cointelegraph reached out to Sphere 3D but did not receive an immediate reply.
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