Key Takeaways
- Marathon reportedly breached their agreement with Ho by executing his strategy without paying him for the proprietary information he provided
- The case was jointly handled by Affeld and Gregg Zucker from Foundation Law Group LLP
Marathon Digital Holdings, the largest Bitcoin miner, has been fined $138 million for violating a non-disclosure agreement. The penalty follows a jury verdict in favor of Michael Ho, a former co-founder of US Bitcoin Corp and current chief strategy officer at Hut 8. The lawsuit, which was initiated by Ho, centered on allegations that Marathon breached a non-circumvention agreement.
The non-circumvention agreement was designed to protect all parties in a transaction, ensuring proper compensation for contributions and proprietary information. According to the law firm Affeld England & Johnson LLP, which represented Ho, the case revolved around a growth strategy that Ho had developed for Marathon Digital in 2020. This strategy included plans to establish a large-scale Bitcoin mining facility in North America. Marathon allegedly executed this strategy without compensating Ho, thus violating the agreement.
“The decision underscores the necessity of ethical business practices and honoring commitments,” said David Affeld, a partner at Affeld England & Johnson LLP. “It sends a powerful message that ethical business practices are not optional; they are essential.” The case was jointly handled by Affeld and Gregg Zucker from Foundation Law Group LLP, who initiated the original legal action.
Despite this legal setback, Marathon Digital Holdings continues to be a dominant player in the Bitcoin mining industry. The company has a market capitalization of $6.77 billion, significantly outpacing its closest competitor, CleanSpark, which stands at $4.13 billion.
The firm has been performing well in recent years. The 2023 fourth quarter revenue saw a staggering 452% increase to $156.8 million exceeding analyst expectations . Recently, Marathon has doubled its operational hashrate to 26.3 exahashes per second, largely due to enhancements at its Ellendale facility. The company’s mining pool captured 158 blocks in June alone, marking a 10% increase from the previous year.
In addition to Bitcoin mining, Marathon Digital has diversified its operations. Last month, the company announced its foray into mining Kaspa (KAS), a token designed to address Bitcoin’s scalability issues. Since September, Marathon has mined approximately $16 million worth of Kaspa tokens, capitalizing on the higher profit margins associated with Kaspa mining machines.
Earlier this year, the firm also announced a partnership with Kenya’s Ministry of Energy and Petroleum (MOEP) to advance the country’s renewable energy infrastructure. Additionally, Marathon Digital had also recently launched a 2-megawatt pilot project in the Satakunta region of Finland.
