Federal Judge approves fraud claims against Bitcoin manufacturer HashFast

HashFast Technologies, a bitcoin equipment manufacturer, announced bankruptcy last year and since then it has been surrounded by a number of legal troubles.

Plaintiff Pete Morici, a bitcoin miner, claimed that he purchased two "Baby Jets", specialized bitcoin mining hardware devices, worth $11,200 of bitcoin from HashFast but did not receive his order as promised nor did he receive any refund for the money invested. Alleging breach of contract and fraud, Morici sued HashFast Technologies, HashFast LLC,  CEO Eduardo deCastro and chief technology officer Simon Barber, in January last year.

"HashFast was capitalized with a total of $641,643, a number that was totally inadequate to undertake production and development of bitcoin mining equipment (which would cost several millions of dollars)," Morici's 22-page complaint read.

Judge Edward Davila ruled in favor of the plaintiff by approving the claim that HashFast violated the Unfair Competition Law (UCL) - which prohibits "acts or practices which are unlawful, or unfair or fraudulent" - and additional allegations of fraud.

The order signed by the judge read, "Based on the foregoing discussion, the court finds that Plaintiff has sufficiently pled a UCL claim against Barber. The court also finds the fraud claim sufficient insofar as it is based on statements Barber made regarding the Baby Jet shipping date and the availability of refunds in bitcoin."

However, the judge dismissed claims against Simon Barber, stating:"With regard to restitution against Barber individually, plaintiff contends that Barber personally benefitted from the unlawful business practices by taking salary bonuses from the proceeds received on undelivered BabyJet orders," Judge Davila said. "Again, although the allegations may ultimately prove untrue, that determination must wait for another day."

He added,  "Plaintiff's allegations, however, do not support liability against Barber for statements describing whether BabyJets were 'in stock.'"