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US Federal Court Judge Allows UnitedCorp to Continue its Antitrust Suit against Bitmain, Kraken, Roger Ver and the ABC Bitcoin Cash Development Team

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Court grants leave for UnitedCorp to submit an amended complaint

Miami, Florida--(Newsfile Corp. - January 31, 2020) - Miami-based United American Corp ("UnitedCorp") (OTC:UAMA) announced today that in a ruling issued by Magistrate Judge Chris McAliley of the US District Court, Southern District of Florida on January 28, 2020, the Judge allowed UnitedCorp to continue its antitrust lawsuit originally filed against Bitmain Group, Bitcoin.com, Roger Ver, Jihan Wu, Kraken, Jesse Powell, Amaury Sechet, Shammah Chancellor and Jason Cox (the "Defendants"). UnitedCorp will have 30 days to submit an amended complaint to address certain issues brought up by the Court after it granted without prejudice the motion to dismiss.

The Court also rejected a motion from counsel of the Bitmain Group and Jihan Wu to have them excluded from the complaint due a one-week delay in service in China. In a related ruling on January 21, 2020 the Court denied a motion by UnitedCorp without prejudice for a 90-day extension to serve foreign defendants Saint Bitts LLC and Amaury Sechet.

The two rulings mean that the complaints can be amended but will not include the two defendants that could not be served in foreign jurisdictions. This ruling comes as the result of a motion presented by the Defendants one year ago on February 1, 2019 to dismiss the complaint in its entirety with prejudice.

While the Judge recognized that there were some deficiencies in the initial UnitedCorp complaint which needed further definition in terms of the Defendants' actions and the injuries to the company, UnitedCorp believes the Court recognized that prima facie, there were key questions of law that needed to be addressed and defined in the emerging cryptocurrency industry.

During the hearing, the Judge questioned defense counsel on the role of Kraken as an exchange had in defining the cryptocurrency market and subsequently did not accept, for now, Kraken's assertion that it had no role in the market and therefore could not be part of the antitrust complaint.

Judge McAliley also did not accept for the time being, assertions made by counsels for Ver, Cox and Chancellor that the Defendants' actions by implementing Checkpoints in the software code, amongst other things, resulted in two competitive chains, therefore there were no antitrust issues to be evaluated since the action would have resulted in increased competition. The Court questioned furthermore, whether those actions are now preventing future changes in consensus rules and if the Bitcoin ABC software patch on November 15, 2018 was applied to both network nodes and exchanges.

The Court raised questions about the market value in the Bitcoin Cash ticker (BCH) at the time of the hard fork and questioned if Kraken would have benefited from its delisting of the resulting coin (Bitcoin SV - "BSV") thereby discouraging trading of BSV just after the hard fork.

The Judge continued to questioned counsel for Kraken on the economic basis for the decision to delist Bitcoin SV as well as its arguments to the effect that BSV would have been unstable with lack of liquidity since this seemed to be the case for many other cryptocurrencies traded on Kraken - not just BSV.

In its defense Kraken counsel argued that it was obliged to disclose to their clients that it believed there was a lack of liquidity in the BSV market which required the immediate delisting of BSV, an argument which was not accepted by the Court at this stage in the proceedings.

One of the more interesting points raised by the Judge in the hearing was whether the US Federal Court could rule on whether or not the Satoshi Nakamoto White Paper of October 31, 2008 (the "White Paper") which initially defined Bitcoin, could be considered as a binding contract or rules among the users in the Bitcoin industry. The Court left open the possibility that this question might have to be addressed at some point.

"We are very pleased with the outcome of the January 28th hearing and that the Court has given us the opportunity to provide additional information and resubmit an amended complaint," stated Benoit Laliberte, President and CEO of UnitedCorp. "We believe the Court has recognized the importance of establishing law in what has been to date, a fairly undefined environment. Bitcoin was developed as a decentralized and distributed peer-to-peer electronic cash system operating under democratic principles created within the network. Any move to centralize or control the network is against its very philosophy and foundation. We are very encouraged by the interest this has generated from antitrust professionals, most of whom agree that this suit is very timely given that antitrust laws are now almost 100 years old, and furthermore that it is time to assess the limits and legality of actions within the cryptocurrency industry."

Background to the Suit

The suit, which was launched on December 6, 2018, is the first antitrust action brought in the United States involving the cryptocurrency industry and is being closely watched by antitrust professionals and the cryptocurrency world.

It alleges that the Defendants collectively engaged in unfair methods of competition, and through a series of deceptive and unfair practices, manipulated the Bitcoin Cash network for their benefit and to the detriment of UnitedCorp and other Bitcoin Cash stakeholders. It further alleges that these actions resulted in the network losing more than US $4 billion in unrecoverable value to network participants at the time as a direct result of the alleged hijacking of the network. This, in addition to a forced network fork with the implementation of their specific new rules set in the Bitcoin ABC 0.18.5 version under the control of the Defendants. UnitedCorp alleges that these new rules set have irreparably harmed the Bitcoin Cash blockchain network and Bitmain, along with the co-Defendants, should be held liable.

UnitedCorp alleges that the Defendants colluded to effectively hijack the Bitcoin Cash network after the November 15, 2018 scheduled software update with the express intent of centralizing the network. This includes allegations that Roger Ver, along with Kraken and developers of Bitcoin ABC, colluded with Chinese-based and Chinese government-financed mining rig manufacturer Bitmain to unfairly redirect hashing power at the exact moment of the scheduled software update, forcing the implementation of Bitcoin ABC software centric checkpoints and thereby moving the network away from its native Bitcoin-based blockchain design.

UnitedCorp also believes that the attempt to dominate the network in favor of a particular Bitcoin ABC version was enhanced by Bitmain's use of firmware known as "Overt ASICBoost" which provides significantly increased operational mining efficiency. This firmware was made available in advance of the last Bitcoin Cash update by Bitmain only to Bitcoin ABC-supported pools, which are operated by Bitcoin.com which is owned by Roger Ver. Overt ASICBoost was not usable by other Bitcoin Cash pools in a time frame that would have allowed them to apply the efficiency during the software upgrade. This gave the Bitcoin ABC-Bitmain-Bitcoin.com group-supported pools a significant advantage and allowed them to accomplish the network control centralization plan.

UnitedCorp alleges that these activities are evidence of not only a violation of the accepted standards and protocols associated with Bitcoin since its inception, but a violation of US antitrust laws, including parts of the Sherman Act.

In their motion to dismiss, the Defendants had argued that the UnitedCorp action did not meet the standards to proceed.

In its opposition to dismiss, UnitedCorp provided a significant number of details to support the suit including evidence that the Defendants themselves made explicit statements declaring that they coordinated, conspired and agreed with each other. This included a YouTube video from an online forum where Andreas Brekken, a Kraken software engineer, acknowledges that Bitcoin ABC developers and crypto exchanges such as Kraken agreed to the entire scheme in advance. In the video, Brekken further admits that the scheme had been planned for a long time and included a software patch that could be applied by the exchanges at a strategic point during the software update which "prevents all future re-orgs" - in other words which allows control of the network.

UnitedCorp's filing also provides support for the allegation that the Defendants' collective actions were for unlawful purposes and in an attempt to manipulate the cryptocurrency market for Bitcoin Cash, violated consensus rules regarding voting and precluded any future changes to Bitcoin Cash functionality and changes to the consensus rules. The actions are compared to the illegal action of "bid rigging" in that Bitmain "mercenary" miners were temporarily redeployed to the Bitcoin Cash network during the software upgrade for the sole purpose of diluting the traditional voting process exercised by existing Bitcoin Cash nodes to dominate the process for a short period of time. This violated the established ground rules of the network that others had respected and relied on for years.

The Bitcoin White Paper clearly states that "Nodes can leave and rejoin the network at will, accepting the proof-of-work chain as proof of what happened while they were gone. They vote with their CPU power, expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on them. Any needed rules and incentives can be enforced with this consensus mechanism." Therefore, the use of CPU power that was never part of the network prior to the network upgrade could not possibly have "rejoined" the network for the voting process. The transient spike in CPU power could only have been achieved at that time through deliberate and coordinated manipulation by the Defendants.

About United American Corp

Established in 1992, United American Corp is a Florida-based development and management company focusing on telecommunications and information technologies. The company currently holds the rights to manage a portfolio of patents and proprietary technology in telecommunications, social media and Blockchain technology, and owns and operates the Data Center Domes which are designed to provide heat for agricultural operations using computer equipment in naturally cooled data centers where efficiency and low-cost operations are a priority.

This news release contains forward-looking statements that are subject to various risks and uncertainties. The Company's actual results could differ materially from those anticipated in such forward-looking statements as a result of numerous factors that may be beyond the Company's control. Forward-looking statements are based on the expectations and opinions of the Company's management on the date the statements are made, and the Company assumes no obligation to update forward-looking statements should circumstances in management's expectations or opinions change.

Source:
United American Corp
Contact:
Investor Relations
investorrelations@unitedcorp.com

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/52000

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