Summary
This United States District Court order denies Plaintiff Block Mining’s motion to compel Defendant Hosting Source to disclose and deposit disputed Bitcoin mining proceeds into the court’s registry. The court found that Hosting Source did not hold the assets in a formal trust relationship under Washington law, but rather managed them pursuant to their colocation services agreement. While the motion to compel was denied due to the ongoing dispute over entitlement to the funds, the court ordered Hosting Source to deposit $156,111.88 plus accrued interest into the court’s registry as undisputed funds.
Topics
Practice areas
Questions Presented
- Whether Federal Rule of Civil Procedure 64(a) and Washington Revised Code section 4.44.480 authorized the court to compel deposit of the disputed mining assets into the court registry.
- Whether Hosting Source's use of the term "in trust" established a trust relationship sufficient to support relief under Washington Revised Code section 4.44.480.
- Whether the court could compel deposit of the undisputed $156,111.88, with accrued interest, without requiring Block Mining to post security.
Holdings
- A party claiming title or a right to funds in its possession cannot be compelled under RCW 4.44.480 to deposit disputed funds into the court registry in a summary manner before the parties' competing rights have been judicially determined. Because Block Mining and Hosting Source disputed each other's rights to the assets, the court denied the requested deposit of the disputed assets.
- Hosting Source's colloquial use of the term "in trust" did not establish that the parties intended to create a trust relationship. The agreement did not create or mention a trust, and Block Mining offered no other evidence of such intent.
- The court could compel Hosting Source to deposit $156,111.88, plus accrued interest, into the court registry because the parties did not appear to dispute that amount. The court did not require Block Mining to post security.
Key quotations
“A party who claims title or right to funds in his or her possession cannot be compelled to pay such funds into the [court’s] registry . . . in a summary manner.” (at 7)
“The court ORDERS Hosting Source to deposit $156,111.88, with accrued interest, into the court’s registry in accordance with Local Civil Rule 67 by July 29, 2025.” (at 9)
Factual background
Hosting Source agreed to house and operate Block Mining's bitcoin mining rigs, supply them with power, and provide access for monitoring and inspection. After Block Mining's loan delinquency was cured, Hosting Source allegedly continued operating the rigs at reduced power, later terminated the agreement, shut down the rigs, and removed Block Mining's VPN access. Hosting Source claimed that Block Mining owed $278,242.41 in fees, while the parties disputed their respective rights to bitcoin and other assets generated by the rigs; they did not dispute that $156,111.88 should be deposited with the court.
Procedural history
Block Mining sued Hosting Source for alleged breach of a colocation mining services agreement, and Hosting Source asserted a counterclaim relating to unpaid fees. During the action, Block Mining moved to compel disclosure and deposit of mining proceeds and related assets into the court registry. The district court denied the motion insofar as it sought the disputed assets, ordered deposit of $156,111.88 plus accrued interest, and denied Block Mining's request for motion-related costs and fees.