Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 1 of 21 PageID #:1
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`IN THE UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF ILLINOIS
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`Case No. 22-cv-7121
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`Jury Trial Demanded
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`FAES & COMPANY (LONDON)
`LIMITED,
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`Plaintiff,
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`v.
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`BLOCKWARE SOLUTIONS, LLC,
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`Defendant.
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`
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`COMPLAINT
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`Plaintiffs Faes & Company (London) Limited (“Faes”), by and through its
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`attorneys, for its Complaint against defendant Blockware Solutions, LLC
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`(“Blockware”), alleges as follows:
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`1.
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` This is an action for breach of contract, negligence, deceptive trade
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`practices, and fraud concerning an arrangement for the purchase of bitcoin miners
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`and related hosting services between Faes & Company (London) and Blockware
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`Solutions. Pursuant to an initial Services Agreement, Blockware sold Faes 50
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`bitcoin miners for $525,000. Exhibit A, Services Agreement dated October 25,
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`2021. As part of the broader transaction between the parties, Blockware agreed to
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`1
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`IN THE UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF ILLINOIS
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`
`
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`
`
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`
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`Case No. 22-cv-7121
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`Jury Trial Demanded
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`FAES & COMPANY (LONDON)
`LIMITED,
`
`
`Plaintiff,
`
`v.
`
`BLOCKWARE SOLUTIONS, LLC,
`
`
`Defendant.
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`
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`COMPLAINT
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`Plaintiffs Faes & Company (London) Limited (“Faes”), by and through its
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`attorneys, for its Complaint against defendant Blockware Solutions, LLC
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`(“Blockware”), alleges as follows:
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`1.
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` This is an action for breach of contract, negligence, deceptive trade
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`practices, and fraud concerning an arrangement for the purchase of bitcoin miners
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`and related hosting services between Faes & Company (London) and Blockware
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`Solutions. Pursuant to an initial Services Agreement, Blockware sold Faes 50
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`bitcoin miners for $525,000. Exhibit A, Services Agreement dated October 25,
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`2021. As part of the broader transaction between the parties, Blockware agreed to
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`1
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`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 2 of 21 PageID #:2
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`host Faes’ miners at one the server facilities it allegedly owned and operated in
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`exchange for monthly hosting and energy fees.
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`2.
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`At the time of the Agreement, however, Blockware did not actually
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`own or operate a facility to host the miners and was not capable of doing so
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`reliably. Further, to the extent Blockware had access to third-party facilities to host
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`and manage the miners, the facilities lacked reliable power (likely due to a limiting
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`contractual arrangement with their energy supplier), so the operation of the miners
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`was and is regularly subject to interruption or “curtailment.” As a result, Faes’
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`miners under Blockware’s management and control have experienced prolonged
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`downtime and inoperability due to lack of power, resulting in significant loss of
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`revenue.
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`JURISDICTION
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`3.
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`This court has diversity jurisdiction over the subject matter of counts
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`one, two, and four under 28 U.S.C. § 1332(a), in that this is a civil action between
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`a corporation based in the United Kingdom and a corporation headquartered in
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`Illinois, and the amount in controversy exceeds $75,000, exclusive of interest and
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`costs.
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`4.
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`This court has supplemental jurisdiction over plaintiff’s state law
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`claims under 28 U.S.C. § 1367.
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`2
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`5.
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`Personal jurisdiction over defendant Blockware is proper in this
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`District because the parties’ Services Agreement designates the state or federal
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`courts sitting in Cook County, Illinois as the jurisdiction for any action or dispute
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`relating to the Agreement, and, on information and belief, Blockware has its
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`principal place of business in Chicago, Illinois.
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`VENUE
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`6.
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`Venue is proper in this district under 28 U.S.C. § 1391(b) because, on
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`information and belief, Blockware’s principal place of business is within this
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`District and the parties’ Services Agreement designates the state or federal courts
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`sitting in Cook County, Illinois as the venue for any action or dispute relating to
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`the Agreement.
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`PARTIES
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`7.
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`Plaintiff Faes & Company (London) Limited is a limited company
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`registered in London, United Kingdom.
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`8.
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`Upon information and belief, Blockware Solutions, LLC is a limited
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`liability company formed under the laws of Delaware with its principal place of
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`business in Chicago, Illinois.
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`BACKGROUND OF THE ACTION
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`9.
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` Plaintiff Faes is a corporation engaged, among other things, in the
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`business of bitcoin “mining.” Bitcoin mining is the process of applying computing
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`3
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`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 4 of 21 PageID #:4
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`power to solving complex cryptographic problems to produce or “mint” new
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`bitcoins, which are assigned to the solver or its “mining pool.”
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`10. Computer systems for bitcoin mining are purpose-built to efficiently
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`solve cryptographic problems. They are sometimes referred to as Application
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`Specific Integrated Circuit (ASIC) miners, as they are designed for the specific
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`application of bitcoin mining. A typical bitcoin mining system retails for around
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`$5,000 to $10,000, depending on the specific architecture and components. A
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`photograph of a Bitmain bitcoin mining system offered by defendant Blockware is
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`shown below.
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`Fig. 1. Bitmain Bitcoin Miner
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`11. Defendant Blockware is a corporation engaged in the sale and
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`management of systems for bitcoin mining. On information and belief,
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`Blockware’s primary business is the management of its customers’ mining systems
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`4
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`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 5 of 21 PageID #:5
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`at its own or third-party data centers. That is, customers purchase mining systems
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`through Blockware, which then procures the miners, installs them, and oversees
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`their operation at data centers in the United States. According to its website, “We
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`host our clients at Blockware’s hosting facilities [sic] WV, PA, and KY.”
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`www.blockwaresolutions.com/hosting-colocation-services.
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`12. Because bitcoin mining is energy intensive, mining systems are
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`typically located in places with low energy cost, such as regions with excess
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`hydroelectric power. Whether bitcoin mining is profitable depends ultimately on
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`various costs, particularly the price of energy, hosting fees, and the price of bitcoin
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`on the open market.
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`13. Blockware not only procures bitcoin miners for its customers, it also
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`serves as the manager and custodian of its customers’ bitcoin mining systems.
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`Blockware bundles the mining systems it sells with “hosting plans,” which include
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`installation, management, and energy fees for the miners at a fixed monthly rate,
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`typically for a term of one year or more. Such plans allow for customer confidence
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`regarding the economic variables pertinent to bitcoin mining, though they can
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`represent a risk for Blockware if the price of energy rises (or a risk for Blockware’s
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`customers if the price of energy declines.) Customers are willing to pay a premium
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`to for bitcoin miners with “hosting” plans, because it ensures the miners will be
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`operational and mining bitcoins shortly after they are received.
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`5
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`14. Faes first became interested in purchasing and hosting bitcoin miners
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`with Blockware as a result of Blockware’s marketing activities and commitments.
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`For example, on June 16, 2022 Blockware sent Faes an email advertisement
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`promising that:
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`We offer exceptional, turnkey miner hosting services within the safety
`and security of the US. Our all-in rates undercut the market by 15-
`20%. We'll help you generate material savings each month by locking
`in below market rates with industry leading uptime and security for
`your rigs.
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`Exhibit B, June 16, 2022 email from Blockware to Faes at p. 4 (emphasis added).
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`As discussed below, Faes was induced to purchase $525,000 in bitcoin miners and
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`related hosting services from Blockware based on these and other
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`misrepresentations.
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`THE CONTRACT
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`15. Blockware Solutions differentiates itself from other bitcoin mining
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`hosting services, such as Compass Mining, by claiming that it owns and operates
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`its own data centers. As Mason Jappa, CEO of Blockware, noted to Faes during
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`discussion of a potential half-million-dollar purchase of miners and associated
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`hosting, “I am confident that we can beat [Compass Mining’s] quotes in bulk, and
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`offer better services - as they rely on third parties for hosting and we have our own
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`hosting facilities. We are also fully vertically integrated with our own pool and
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`miner management software.” Exhibit C at 2, October 14, 2021 06:31 email from
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`6
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`Mason Jappa to Christian Faes (emphasis added). Mr. Jappa further noted that, “I
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`can have you online in December, and sell you 150 x S19j Pro 100T November
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`batch for $9950 landed cost each with a 6.8c kWh hosting rate. This is a real quote,
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`not a fantasy land :)” Id. at p. 3.
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`16. After further discussion, four days later Mr. Faes wrote to express
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`interest in purchasing 50 miners and to clarify certain terms of the arrangement,
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`such as the cost and that the miners would be “new”. Ex. C at p. 5, October 18,
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`2021 email from Christian Faes to Mason Jappa (emphasis original). After some
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`additional discussion regarding cost and delivery date, Mr. Faes agreed to purchase
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`50 Antminer S19j Pro 100 TH's for “$10,500/machine all in.” Id. at 7, October 19,
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`2021 email from Christian Faes to Mason Jappa. The following day Blockware
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`sent Faes an invoice for $525,000 for the miners, which was timely paid.
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`17.
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`In association with the purchase of the 50 miners, Faes signed a
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`“Services Agreement” on October 25, 2021. Exhibit A, Services Agreement.
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`Importantly, the Services Agreement is for the purchase and delivery of the
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`specified miners, but it is not a contract for hosting services. The Agreement states,
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`“After Client has remitted payment to Blockware for the full amount of the
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`Invoice, Blockware will arrange for the purchase and delivery of the specified
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`computer system(s) on behalf of Client at the soonest opportunity.” Id. at sec. 1.
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`And further, “This Agreement… will continue in effect through the earlier of (A)
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`7
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`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 8 of 21 PageID #:8
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`the completion of the Services described in paragraph 1 above [purchase and
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`delivery of the miners by Blockware] or (B) the termination of this Agreement as
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`expressly provided for in this Agreement.” Id. at sec. 3(a) (emphasis added).
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`18. Mr. Jappa of Blockware had earlier emailed Mr. Faes a separate
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`“Colocation Facilities Services Agreement” for review, but Mr. Faes objected to its
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`terms and never signed or otherwise adopted this Agreement. Ex. C at p. 5-6. Thus,
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`“hosting agreement” agreed to between the parties is that agreement manifested in
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`the parties’ communications, Blockware’s representations, and the reasonable and
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`good faith performance implied by law. Faes’ breach of contract claim is based on
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`Blockwares’ failure to provide hosting services consistent with its representations
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`and the parties’ negotiated arrangement.
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`BLOCKWARE’S MISREPRESENTIONS AND BREACHES
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`19. For each miner and hosting plan it sells, Blockware is accepting an
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`agency relationship on behalf of its customers with related obligations, including
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`diligent and faithful services. Blockware procures the miners, takes custody of
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`them, installs them at a data center, and oversees their management and operation
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`on behalf of the customer, which derives revenue from their operation. Based on its
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`representations that it has the ability to safely and competently manage bitcoin
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`mining systems at its own facilities for predictable fees, Blockware sells customers
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`hundreds of thousands of dollars worth of computer hardware and services.
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`8
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`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 9 of 21 PageID #:9
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`20. One of the most significant concerns for mining bitcoin is “uptime,”
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`the amount of time miners are actually operational and performing their intended
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`task, mining bitcoin. Bitcoin mining hardware is designed for extended uptime,
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`and it is not atypical for miners to operate for months with no downtime. At a
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`minimum, new miners hosted in a professional facility should have at least 95%
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`uptime. According to Blockware’s Website, “WE OFFER: Timely setup of
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`machines, Reliable internet and power, Industry-leading up-times.” Exhibit D,
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`www.blockwaresolutions.com/hosting-colocation-services. Blockware has
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`specifically breached each of these “OFFERS” with respect to Faes.
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`21. Faes ordered its miners from Blockware, expressly stating that, “I will
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`go for the January delivery.” Exhibit C at 7. Blockware accepted this offer and
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`Faes’ $525,000 payment in October 2021. However, it was not until April 15, 2022
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`that Faes’ miners actually went online. Even accounting for potentially
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`“reasonable” delays, Faes’ lost at least a month and a half of uptime due to
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`Blockware’s failure to abide by its commitment to “timely set up” Faes’ miners.
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`22. More significantly, Blockware has failed to provide reasonable, much
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`less “Industry-leading,” uptime for Faes’ miners. As of October 2022, the average
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`uptime for Faes’ miners at Blockware’s facility was less than 70%, and the miners
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`have largely been offline during November 2022. If the relevant date is taken to be
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`9
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`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 10 of 21 PageID #:10
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`January 1, 2022 instead of April 15, 2022 (when the miners actually went online),
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`their uptime is less than 50%.
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`23. Problems with downtime began approximately two days after Faes’
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`miners first came online and have persisted throughout 2022, resulting in
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`numerous complaints and support tickets by Faes. Despite these problems,
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`Blockware hosts and updates a public “status page” that shows persistent high
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`uptime at its facilities, including the Pennsylvania facility where Faes’ miners have
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`been hosted, showing consistent 100% uptime for the preceding 90 days. Exhibit
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`E, “Status Page” at www.blockwaresolutions.statuspage.io.
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`24. Despite the displayed “100% uptime”, if one clicks on the “incident
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`history” at the bottom of the “Status Page,” one is directed to a page showing
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`approximately 50 days of extended power “curtailment” at the Pennsylvania
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`facility during September and October. Exhibit F, Incident History at
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`www.blockwaresolutions.statuspage.io/history?page=1. In contrast to reports of
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`near perfect uptime, the miners managed and overseen by Blockware at the
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`Pennsylvania facility were often nonoperational due to curtailment of power at the
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`facility.
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`25. On information and belief, such “curtailments” are the result of a
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`power contract Blockware or its agent entered into with its energy supplier that
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`limited Blockware’s exposure to increased energy costs to the detriment of its
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`10
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`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 11 of 21 PageID #:11
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`customers, including Faes, despite Blockware’s commitment to provide reliable
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`power at a fixed rate of $0.068 per kW/h. Blockware’s claims that it offers
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`“Reliable internet and power” and that its facilities experience “100% uptime”
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`even when (at least) its Pennsylvania facility has been subject to regular and
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`extended energy curtailment are false and misleading and induced Faes to contract
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`with Blockware to procure and host its miners.
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`26. The depth of Faes’ frustration with Blockware’s failure to deliver on
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`its promises is detailed in a lengthy email exchange from September 27, 2022 to
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`October 18, 2022 with the subject “Really need some action.” Among other things,
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`Faes notes:
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`Whilst I am meant to have 50 machines hashing with Blockware, I have
`only been getting at best c.2.5PH [pentahash, a unit of computing power
`equal to 1000 terahashes] (ie, half what I should be hashing), and most
`days it's more like 1.5PH. From Blockware Terminal we can see that
`there are 21 machines that haven't hashed at all since the last few weeks
`of August; and haven't had anywhere near 5PH since mid August.
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`Exhibit G, September 27 to October 18 emails between Faes and Blockware at p. 1
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`(emphasis original). On October 13, 2002, after Blockware repeatedly failed to
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`address Faes’ concerns, Faes emphasized that:
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`We are meant to have 50 machines with Blockware but have now been
`months, with no more than 2.5PH and only for a few hours a day. We
`have only had 5PH a few weeks, since we ordered the machines a year
`ago. This isn't right.
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`I have also been asking for serial numbers for about 10 weeks now. This
`all smells very fishy.
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`11
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`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 12 of 21 PageID #:12
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`Id. at p. 3 (emphasis original).
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`27.
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`In fact, since approximately October 20, 2022, all 50 of Faes’ miners
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`at Blockware’s Pennsylvania facility have been offline without justification or
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`even explanation. Assuming a bitcoin price of $20,000, this represents a continuing
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`loss to Faes of approximately $5,000 per month after deducting expected energy
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`costs and hosting fees. Faes’ miners currently remain offline and in Pennsylvania
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`even though the parties have engaged in months of negotiations and discussions to
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`transfer the miners from Blockware’s Pennsylvania facility to its data center in
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`Kentucky, which allegedly has access to reliable power.1
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`28.
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`In addition to failing to manage and oversee Faes’ miners so that they
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`can achieve their intended purpose of mining bitcoins, Blockware has unilaterally
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`increased it fees for the energy used to operate the miners. As discussed above,
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`Faes contracted with Blockware for one year to host and manage its miners and
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`provide energy at a fixed cost of $0.068 kW/h. However, as of August 1, 2022,
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`Blockware has raised its energy fees to $0.08 kW/h.
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`29. When Faes complained about the rate increase, Warren Rogers,
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`Blockware’s CFO, replied that, “We have raised all client charges to 8c with no
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`1 As of the date of this Complaint, Blockware has apparently agreed to ship the
`Pennsylvania miners to Faes. Of course, this will result in additional downtime and
`Faes will have to procure substitute hosting for the machines as a result of
`Blockware’s misrepresentations and contractual breaches, with attendant damages.
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`12
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`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 13 of 21 PageID #:13
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`exceptions due to the unprecedented cost inflation that we are experiencing. We
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`have the absolute right to do so.” Exhibit H, August 3, 2022 email from Rogers to
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`Faes at p. 3. Mr. Rogers further threated that, “If you choose not to comply, you
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`may remove your machines from our hosting facility. If your invoice is not settled
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`within the stated time frame, we reserve the right to point your machines to our
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`account, disconnect, or resell to cover our damages.” Id. While Blockware had no
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`right to take such actions under the parties’ agreement and could not lawfully do so
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`as Faes’ agent, Mr. Rogers used the fact that Blockware had physical possession of
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`Faes’ property to extort additional payment for Blockware. Blockware thus
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`disavowed the risk it accepted by entering into a fixed energy price contract with
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`Faes. Had the price of energy fallen, Blockware would undoubtedly not have
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`passed along the windfall to Faes or other customers.
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`30. When Faes escalated the issue to Blockware’s CEO, Mason Jappa,
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`Mr. Jappa replied, “We have enacted force majeure due to the drastic increase in
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`costs and are forced to raise our hosting rates to become above the water on
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`hosting.” Exhibit I, August 4, 2022 email from Jappa to Faes at p. 1. While an
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`increases in energy costs may be an unfavorable development for a party that
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`contracts to provide energy at a fixed rate, it does not constitute a force majeure
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`under any standard interpretation of the doctrine.
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`31. To the extent Faes “agreed” to pay the increased energy fees, this was
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`only done under duress because Blockware had possession of Faes’ miners and
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`threatened to disconnect or even sell them if Faes did not accede to Blockware’s
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`demands. In any event, the effect of Blockware’s unilateral increase in energy
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`prices has been diminished by the fact that Faes’ machines at Blockware’s facility
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`have been completely nonoperational since October 20, 2022.
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`32.
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`In addition to, and potentially explanatory of, Blockware’s failures to
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`initiate hosting of Faes’ miners in a timely manner, to ensure reasonable uptime
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`and consistent power, and to honor their commitment to a fixed energy fee,
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`Blockware has also failed to provide Faes with serial numbers and proof of
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`ownership of its miners. On information and belief, Blockware has failed to
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`provide relevant information regarding Faes’ miners because they are not actually
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`new, because Blockware has used Faes’ miners to mine part-time for itself or other
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`customers, or because Blockware is otherwise unable to track customer equipment
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`in its possession, custody, and control.
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`33. Faes initially requested that Blockware provide serial numbers for its
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`miners in early August. Exhibit J, August 3, 2022 email from Faes to Alex
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`Leathead at p.1. It has been almost four months since Faes made this request,
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`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 15 of 21 PageID #:15
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`following up multiple times, and Blockware has yet to provide the information.2
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`While the specific reason for this failure is unknown, it represents a breach of
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`Blockware’s duty to faithfully and competently manage and oversee the miners in
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`Faes’ interest and appears to reflect subterfuge on the part of Blockware. Among
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`of things, if Faes cannot verify which miners in Blockware’s possession it actually
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`owns, it cannot determine whether its “assigned” miners are consistent with the
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`miners it actually purchased, whether any alleged mechanical problems actually
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`concern its miners, and whether its miners are bring properly credited for their
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`contribution to Blockware’s “mining pool.”
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`34. Upon information and belief, Blockware’s acts complained of herein
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`are willful and deliberate.
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`35. Blockware’s acts complained of herein have caused damage to Faes in
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`an amount to be determined at trial, and such damages will continue to increase
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`unless Blockware is enjoined from its wrongful acts.
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`FIRST CAUSE OF ACTION
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`(Breach of Contract)
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`36. Plaintiff hereby re-alleges and incorporates by reference herein the
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`prior allegations contained in this Complaint.
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`2 On December 12, 2022, after receiving a draft of this complaint, Blockware did
`provide Faes a list of serial numbers. Faes has not yet had an opportunity to assess
`whether the serial numbers reflect the miners he purchased.
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`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 16 of 21 PageID #:16
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`37. Faes has duly performed all relevant conditions by paying Blockware
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`over half a million dollars for the procurement, installation, oversight, and
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`management of bitcoin mining systems purchased from Blockware.
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`38. Blockware is Faes’ agent with respect to the operation and
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`management of Faes’ bitcoin mining systems.
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`39.
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`In breach of its representations to and agreements with Faes and its
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`duties as an agent, Blockware has failed to undertake even reasonable efforts to
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`ensure the safe, effective, and continuous operation of Faes’ bitcoin mining
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`systems by, among other things, failing to timely procure and set up the miners as
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`agreed, failing to ensure reasonable uptime the miners, failing to ensure consistent
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`power for the miners, failing to actually own and control the facility in which the
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`miners are housed, failing to charge for energy at the agreed-upon price of $0.068
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`kW/h, and failing to provide Faes with serial numbers for its miners in
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`Blockware’s possession, custody, and control.
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`40. Blockware has concealed and failed to disclose the actual nature of its
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`business, including lack of ownership of its alleged data facility, its inability to
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`ensure consistent uptime, and lack of access to reliable power, such that Faes was
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`induced to contract with Blockware for the management of its bitcoin mining
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`systems under false pretenses and without disclosure of material information.
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`41. As a result of Blockware’s actions, omissions, Blockware has
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`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 17 of 21 PageID #:17
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`breached its agreement to responsibly manage Faes’ bitcoin mining systems.
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`42. Through its breach, Blockware has directly caused damage to Faes,
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`including lost revenue from bitcoin mining, lost revenue from excessive downtime
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`of its miners, excess energy fees, and loss of income from the cessation of
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`operation of Faes’ miners in an amount to be determined.
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`SECOND CAUSE OF ACTION
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`(Negligence)
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`43. Plaintiff hereby re-alleges and incorporates by reference herein the
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`prior allegations contained in this Complaint.
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`44.
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`In agreeing to procure and manage Faes’ bitcoin mining systems in
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`exchange for payment, Blockware agreed to act at Faes’ agent with respect to its
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`bitcoin mining systems. Generally, an agent is a fiduciary, whose obligation of
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`diligent and faithful service is the same as that of a trustee. An agent is required to
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`disclose to the principal all information relevant to the subject matter of the
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`agency.
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`45. As Faes’ agent, Blockware accepted certain duties with respect to
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`Faes’ mining systems, including duties of care, diligence, and skill in performance
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`of its management function.
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`46. By failing to use even reasonable efforts to secure and promote the
`
`interests of Faes with respect to the bitcoin mining systems within Blockware’s
`
`
`
`17
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`
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`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 18 of 21 PageID #:18
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`custody and control without adequate justification, and by failing to disclosure
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`relevant information, including its lack of ownership of the mining facility,
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`inability to provide for consistent power, and failure to provide serial numbers for
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`Faes’ equipment, Blockware breached at least its duties of care, diligence, skill,
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`and disclosure with respect to Faes.
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`47. Through its actions and omissions, Blockware has directly caused
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`damaged to Faes, including lost revenue from bitcoin mining, lost revenue from
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`excessive downtime of its miners, excessive energy fees, and loss of income from
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`the cessation of operation of Faes’ miners in an amount to be determined.
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`THIRD CAUSE OF ACTION
`
`(Deceptive Trade Practices, 6 Del. Code § 2531 et seq.)
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`48. Plaintiff hereby re-alleges and incorporates by reference herein the
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`prior allegations contained in this Complaint.
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`49. This is an action for deceptive trade practices under 6 Del. Code §
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`2531, et seq.
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`50. By virtue of the acts complained of herein, defendant has, inter alia,
`
`used deceptive representations with respect to goods or services, intentionally
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`advertised goods or services with intent not to sell them as advertised, and
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`represented their services to have characteristics that they do not have. On
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`information and belief, defendants have also represented that the goods it sold are
`
`
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`18
`
`
`
`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 19 of 21 PageID #:19
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`new when they are used or reconditioned.
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`51. Defendant’s acts complained of herein constitute deceptive trade
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`practices, which have injured and damaged Faes.
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`FOURTH CAUSE OF ACTION
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`(Fraud)
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`52. Plaintiff Faes hereby re-alleges and incorporates by reference herein
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`the prior allegations contained in this Complaint.
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`53. As detailed in this Complaint and attached exhibits, Blockware has
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`engaged in fraudulent misrepresentations or concealment regarding: (1) its alleged
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`secure and competent management of its customers’ miners in at facilities it owns
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`and controls, including that it provides “industry leading uptime” and “below
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`market rates”; (2) the reliability and consistency of its mining operations; (3) its
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`ownership and control of its alleged Pennsylvania facility; (4) Blockware’s
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`inability to procure consistent power for its customer’s miners without curtailment;
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`(4) falsely reporting “uptime” regarding miners housed in its alleged Pennsylvania
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`facility when they were in fact subject to curtailment; (5) Blockware’s inability to
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`provide serial numbers for Faes’ miners, placing a cloud on their ownership; [and]
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`(6) Blockware stating that it would provide energy at a fixed fee while concealing
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`that it did not intend to do so if the energy market became unfavorable.
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`54.
`
` In reliance of Blockware’s false representations and omissions of
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`
`
`19
`
`
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`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 20 of 21 PageID #:20
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`material fact, as detailed above and in the body of this Complaint, Faes was
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`induced to purchase and continue hosting over $500,000 dollars worth of bitcoin
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`mining systems with Blockware, to appoint Blockware as its agent, and to entrust
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`Blockware with the operation and management of the miners at Blockware’s
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`alleged facility.
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`55. As a result of relying on Blockware’s false representations, omissions
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`of material fact, and failure to act in customers’ best interest, Faes has been
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`damaged in an amount of not less than $250,000.
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`56. Faes has also suffered consequential damages, including loss of
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`expected profit from the operation of its miners, time and efforts of agents and
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`employees to investigate and address the matter, interest, legal fees, and other
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`damages. Punitive damages and attorneys’ fees are warranted because Blockware’s
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`misrepresentations and calculated omissions were willful, wanton, and oppressive.
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`PRAYER FOR RELIEF
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`WHEREFORE, Faes & Company (London) Limited prays for the Court to
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`enter judgment and provide relief as follows:
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`(a) award Faes damages for Blockware’s breach of the Parties’ contracts and
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`additional direct and consequential damages in an amount to be proven at
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`trial;
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`(b) award Faes damages for Blockware’s negligence or willful breach of its
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`duty as an agent to responsibly manage Faes’ property in an amount to be
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`proven at trial;
`
`
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`20
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`
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`Case: 1:22-cv-07121 Document #: 1 Filed: 12/17/22 Page 21 of 21 PageID #:21
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`(c) award Faes damages in connection with Blockware’s deceptive trade
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`practices;
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`(d) award Faes compensation for Blockware’s fraud;
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`(e) award Faes punitive damages in connection with Blockware’s fraud;
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`(f) award Faes attorneys’ fees and treble damages in connection with
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`Blockware’s deceptive trade practices pursuant to 6 Del. Code § 2533(b)
`
`and (c).
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`(g) such further and additional relief as the Court deems just and proper.
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`JURY DEMAND
`
`Plaintiff demands a trial by jury.
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`
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`
`
`
`
`
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`
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`Dated: December 16, 2022
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`
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`
`
`
`
`
`
` Respectfully submitted,
`
` By: /s/ Alan E. Engle
`Alan E. Engle
`CA Bar No. 224779
`(applying for pro hac vice)
`Meador & Engle
`1115 Seal Way
`Seal Beach, CA 90740
`(310) 428-6985
`alan.engle@meenlegal.com
`
`Wesley E. Johnson
`(Ill. Bar No. 6225257)
`Goodman Tovrov Hardy & Johnson
`LLC
`105 W. Madison, Ste. 1500
`Chicago, IL 60602
`(312) 752-4828
`wjohnson@goodtov.com
`
`Attorneys for Plaintiff
`Faes & Company (London) Limited
`
`
`
`21
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`
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