Suit Alleges SMIC Bilked Tex. Entity Out of $19.1M for Undelivered Wafers

A Texas entity, High Sharp, prepaid $19.1 million to a subsidiary of Semiconductor Manufacturing International Co., China’s largest chipmaker, to procure wafers for use in producing cryptocurrency “miners” during their peak demand in 2021, but never received the goods, alleged a fraud complaint Monday (docket 2:23-cv-08934) in U.S. District Court for Central California in Los Angeles. A miner is a specialized computer designed for the single purpose of mining new cryptocurrencies “by solving complex mathematical puzzles,” said the complaint. Each time a puzzle is solved, the owner of the miner is rewarded with cryptocurrency, it said. The SMIC subsidiary and its officers “never intended to deliver any wafers,” said the complaint. They instead used the prepayment “to fund the manufacture and delivery of wafers to third parties after conducting a secret bidding war to fetch the highest price possible,” it said. High Sharp “entirely missed its bargained-for and intended opportunity,” because the cryptocurrency market “cooled during the time period” in which it discovered the defendants’ “intentional malfeasance,” it said. The complaint seeks restitution of the $19.1 million prepaid, plus “exemplary and punitive damages in a sum according to proof.”