Hogan Lovells obtains key concession on behalf of Gryphon Digital Mining in litigation against Sphere 3D

On June 27, 2024, during a court conference in the litigation proceedings between Gryphon and Sphere in the U.S. District Court for the Southern District of New York, Sphere conceded that it was no longer seeking to impose any liability against Gryphon for events that occurred in early 2023 in which a hostile threat actor impersonated Sphere’s chief financial officer in an email sent to both Sphere and Gryphon’s personnel and requested the transfer of twenty-six (26) bitcoins from a Sphere wallet controlled by Gryphon.

As background, Sphere filed an action against Gryphon on April 7, 2023. Sphere’s claims were, in part, predicated on allegations that Gryphon was responsible for the hostile threat actor’s conduct in early 2023. After the incident, Gryphon engaged a third-party to perform an independent forensic investigation, which concluded that Gryphon's internal security systems were not breached.

Sphere’s concession during the June 27, 2024 court conference means that Gryphon is no longer subject to liability on the basis of these allegations. Gryphon believes that Sphere’s remaining allegations also lack merit and will vigorously defend against them. Meanwhile, Gryphon continues to aggressively pursue its own claim against Sphere, which is predicated on Sphere’s flagrant and repeated breaches of the Master Service Agreement (MSA). Gryphon is seeking approximately US$45 million in damages from Sphere for Sphere’s breaches of the MSA. The parties are in the early stages of discovery in this action.

Gryphon is represented by Hogan Lovells attorneys Dennis H. Tracey, III, Elizabeth C. Carter, and William C. Winter.

Gryphon’s press release about this development is here.