Crypto Chip Firm Katena Successful in Case Filed by Coinmint
The arbitration panel rules out Katena did not trick or hoodwink Coinmint. The chipmaker was awarded $14M.
In February, a panel of arbitrators ruled that Katena Computing, a crypto technology form, did not deceive Coinmint into a $150M purchase agreement. The mining firm had filed a case against Katena and DX Corr, a semiconductor firm.
Coinbase Alleges Deception From Katena
In a case filled in 2023, Coinbase claimed that Katena and DX Corr colluded to deceive it into buying bitcoin mining machines worth $150M that were not delivered. The miner noted that Katena bribed or otherwise swayed Michael Maloney, its ex-chief financial officer, to secure the sale, fully knowing it would be unable to provide mining chips it was still creating. It demanded a $23M refund from Katena.
In February, a panel of arbitrators ruled that Katena had not misled Coinmint or contravened its agreements. It dismissed all claims and awarded Katena slightly more than $14M.
According to a document filed in the court, the arbitration panel established that the evidence demonstrated how Coinmint and its executives autonomously opted to make the $150M purchase ‘without pressure or Katena’s influence.’ This happened after negotiating an initial $100M agreement that Coinmint raised to $150M.
Katena Complied with the Agreement
It was also established that Katena had not violated any contracts in its agreement with the miner. The panel said that Coinmint acknowledged it failed to meet all the conditions required.
Coinmint quoted text messages shared between Katena officials as proof that the firm influenced Maloney. However, in its report, the panel revealed that the messages were more ‘brainstorming and ambitious chatter’ compared to proof that the firm was actively seeking to recruit the then-chief financial officer at Coinmint.
The panel concluded that Katena did not misrepresent the condition of a chip it was creating in marketing materials to Coinmint. Specifically, it noted that the crypto chip firm provided extensive proof, in the absence of significant impeachment or disproof by Coinmint, regarding the ASIC chip’s design for the K10 and preparing the chip design for submission to the foundry. This included running simulations to identify faults in the design.
Katena Actively Sought to Developing Miners and Chips
Katena also provided additional evidence indicating it was actively seeking to develop the miners and chips it planned to sell Coinmint, disproving one of the assertions that it was unwilling to manufacture the machines.
Michael Gao, a founder and partner at Katena, revealed they underwent an entire discovery process that involved the crypto chip firm producing everything based on the panel’s orders, evading developing everything. He also claimed they both had the chance to recruit expert witnesses to defend their case.
Coinmint should have recruited their expert witness and had the chance to evaluate all technical plans and other things in the due diligence report. As such, they could fully access all materials produced in discovery.
Gao noted that Coinmint’s team experienced difficulties identifying untrue assertions from Katena. According to the final report, Katena’s win was founded on the facts established by the panel and not on technicalities.
Coinmint Vows to Challenge Award
In court filings, Coinmint’s new lawyers revealed the miner’s intention to file a motion to vacate the arbitrary award. Emails attacked as evidence to the motion show that the firm is criticizing the manner in which the arbitration process took place. In an email, Steven Feldman, a lawyer representing Coinmint, claimed that the panel ‘sabotaged any due process impression.’ As an example, he quoted a decision to block transcriptions from specific witnesses.
In its extension motion, Coinmint’s lawyers revealed there are reasons to vacate the order, highlighting the absence of recorded evidence. According to the filing, factual findings in the Award are affected by the Panel’s exclusion of a record. For instance, the Award notes the absence of proof that Michael Maloney, the miner’s ex-chief financial officer, was offered a job at Katena. This is a critical element of Katena’s supposed misconduct. The information is untrue since Maloney acknowledged to the contrary in his testament, which the Panel prevented Coinmint from recording.
The emails filed as an exhibit show that a Katena lawyer disagreed with how Coinmint characterized the process. According to Jacob Taber, the parties have battled for a long time, which resulted in Coinmint losing. In another email, he said their client has been waiting long to be paid what was owed based on the contract and wants a fast resolution to disputes concerning the award.
District Judge Richard Seeborg allowed an extension for Coinmint to file its opposition.
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