UnitedCorp has launched a lawsuit in the United States District Court for the Southern District of Florida against global cryptocurrency mining powerhouse Bitmain, the Kraken cryptocurrency exchange which has hundreds of millions of USD of daily trading volume, Bitcoin.com which runs a popular news website and mining pool, and the CEO of Bitcoin.com, Roger Ver aka Bitcoin Jesus. UnitedCorp asserts that the defendants colluded to take control of Bitcoin Cash for personal gain, which caused massive losses to the Bitcoin Cash ecosystem. UnitedCorp seeks an injunction against the defendants, to prevent them from doing anything else to manipulate the Bitcoin Cash network, and also seeks an undefined amount of monetary damages. This news is perhaps why the price of Bitcoin Cash, which used to be Bitcoin Cash ABC, has fallen 14% in a day to USD 114, while the other fork of Bitcoin Cash, Bitcoin SV, has risen to USD 104. This is a narrower gap than ever before between the 2 forks of Bitcoin Cash, and it seems possible that Bitcoin SV could surpass Bitcoin Cash’s price at some point.
A week before the Bitcoin Cash fork on 14 November 2018 the Bitcoin Cash market cap was in excess of USD 10 billion. Most of this market cap has been liquidated, with Bitcoin Cash having a USD 2 billion market cap and Bitcoin SV having a USD 1.8 billion market cap as of 6 December 2018. This indicates losses of USD 6.2 billion across the Bitcoin Cash ecosystem.
Now UnitedCorp is alleging that Bitmain, Kraken, Bitcoin.com, and Roger Ver are at least partially responsible for this situation and the associated losses. Bitcoin.com and Roger Ver are avid Bitcoin Cash ABC supporters; they massively increased the hash rate of their mining pool to support Bitcoin Cash ABC, to prove that it was the dominant chain when the fork happened. This ended up being a major early victory that helped cement the widely held belief that Bitcoin Cash ABC is the true Bitcoin Cash.
Bitmain’s former CEO Jihan Wu is another major Bitcoin Cash ABC advocate, and sided strongly with Roger Ver. Bitmain played a role in helping Bitcoin Cash ABC win the hash war, by deploying 90,000 S9 Antminers just before the fork. As for Kraken, they automatically supported only Bitcoin Cash ABC, and did not wait to see which fork of Bitcoin Cash would be dominant. This implicitly means that anyone holding Bitcoin Cash on Kraken did not receive their Bitcoin SV following the fork. Also, in general, a major exchange like Kraken rejecting Bitcoin SV hurt Bitcoin SV’s chances at becoming the dominant fork.
The press release for this lawsuit states “UnitedCorp alleges that the use of computational hashing power that did not contribute to the network just prior and then was withdrawn shortly after the network upgrade was put in place for the sole purpose of maintaining an artificially longer chain over the existing rule sets and amounted to human manipulation… and that this was orchestrated by a small group of individuals and corporations.”
After the fork, even though Bitcoin Cash ABC had by far more hash power and the longest chain, there were fears being hyped up that Bitcoin SV supporters were secretly mining the longest chain and would fork Bitcoin Cash ABC. The Bitcoin Cash ABC development team implemented a checkpoint in the blockchain, at the exact block where the Bitcoin Cash fork happened, to prevent anyone from forking Bitcoin Cash ABC in the future. The UnitedCorp lawsuit refers to this as a poison pill, specifically saying “On November 20th, the ABC development team planted a “poison pill” into the blockchain in the form of a “Deep Reorg Prevention” as well as other functionality in order to cement the control of the blockchain ledger. This intervention allows maintenance of control on future implementations and any related rule sets for future network upgrades.”
Bringing all of this together, Bitmain and Bitcoin.com coordinated on ensuring that Bitcoin Cash ABC would have the highest hash rate and longest chain, at least long enough for it to be declared the dominant form of Bitcoin Cash, after which point they pulled the extra hash rate. Kraken aided this effort by not giving any credence to Bitcoin SV, even before the fork happened. The Bitcoin Cash ABC development team implemented centralized control of the blockchain during this time, to ensure they had absolute control over Bitcoin Cash ABC’s future changes.
Ultimately, this lawsuit is about whether it is legal for a decentralized cryptocurrency like Bitcoin Cash to be taken over and centralized. The President of United Corp, Benoit Laliberte, says “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. In order to maintain confidence in cryptocurrencies such as Bitcoin Cash, no person or entity can be allowed to control them.”