New York Bitcoin Mining Tycoon Accused of Stealing Over 5,000 Bitcoin Mining Machines

Northway Mining, a New York-based hosting company for bitcoin mining equipment, has been accused of stealing at least 5,100 bitcoin mining machines from two companies.

At least four Bitcoin companies are said to be victims, MinedMap, Inc, Serenity Alpha, Inc, two companies from Nevada and Quebec, Canada, respectively. Another is BlockAssets in Perth, Australia.

In September 2018, the former chose to host more than 2,800 Bitmain Ant S9 miners at Northway Mining, accounting for more than half of the company's total machines. Another 800 miners were also transferred to the mine. The latter was because a Canadian company could not handle their 1,500 miners made the decision for them.

The lawsuit against Northway Mining, which is being treated as a criminal investigation by federal authorities, was jointly filed by MinedMap, Serenity Alpha and Quebec Inc. The US Marshall Service last week searched a facility leased by Northway Mining in Coxsackie, New York.

More than 5,000 Bitmain Antminers stolen

The ongoing lawsuit alleges that Northway defrauded customers of nearly 3,600 bitcoin mining rigs (one of which was recovered with the help of the Marshalls) and more than $500,000 in deposits. The complaint states:

Québec Inc. is seeking the return of its deposits of $46,746.09, $23,255.66 and $23,824.42, totaling $93,826.17, as the deposits have not been used for electricity since the mining machines were not powered. [...] On September 21, 2018, MinedMap and Serenity remitted $162,000.00 to Northway as a deposit for electricity costs to host MinedMap and Serenity mining machines. Almost a week later, MinedMap and Serenity paid an additional $270,000.00 for electricity costs.

CCN spoke to Daniel Injoon Kim, managing partner of MinedMap and Serenity Alpha. Between the two companies they have over 5,000 Ant S9j running. If it weren't for what happened at Northway Mining (the factory they hired to manage the new batch of miners), their gains would have probably been over 50% higher.

They shipped directly from Bitmain last September. Kim and some partners have been mining bitcoin in Canada since 2016, but they were forced to work with partners when Quebec suspended new mining operations. They found Northway on the recommendation of an acquaintance. Kim and his partners thought the broker was sincere.

“Where’s my money? Where’s my mining machine?”

What happened to the Bitcoin miners after they arrived at the Coxsackie facility remains a mystery. It is possible that they were resold. The miners may be operating somewhere under the Northway name at this point, but this cannot be verified.

Court documents state that as of June 2018, the facility was unable to house even 200 mining machines, which highlights allegations of fraud — which the plaintiffs believe was organized and intentional from the outset.

Kim told CCN:

We made a deal to have our miners at a facility located 30 minutes south of Albany, NY. They kept lying to us until the end. We finally wanted to pull the miners out in February and then he said to talk to our lawyers and as of today, May 2, 2019, they left our boxes and 1 miner and have either resold it or are hosting it with another third party.

The owner of the factory facility sued Northway, and according to court documents, Northway owed the owner of the facility a large sum of money.

The lawsuit alleges that the plaintiffs collectively lost about $1 million in bitcoin mining revenue. Based on current market conditions, the mining machine itself is worth about $900,000.

If Serenity and MinedMap had received their mining machines in time, they would have earned at least $1 million by now.

On top of legal fees and the cost of wining and dining Northway partners, the scammers have made a sizeable haul.

Northway CEO Michael Maranda said he used all the deposit money to build a new plant.

Michael Maranda has not yet responded to the lawsuit, which has been moved to another jurisdiction. We encourage anyone familiar with him or his whereabouts to contact attorney T. Edward Williams with any information.

This is a developing story that will be followed in the coming weeks.