Michael Ho V. Marathon Patent Group, Inc. Et Al

Case Background

On January 14, 2021,  Michael Ho, one of the founders of the cryptocurrency entity U.S. Bitcoin Corp., filed a breach of contract lawsuit against Marathon Patent Group, a cryptocurrency mining company based in Las Vegas, Nevada, for misrepresentation, unjust enrichment, and violating the terms of their Non-Disclosure agreement.

The case was subsequently removed from Riverside Superior Court to the United States District Court, California Central (Eastern Division – Riverside). The lawsuit was assigned to Judge Sunshine Suzanne Sykes and referred to Magistrate Judge Sheri PYM. [Case number: 5:21cv339]

Cause

Michael Ho (“HO”), a Dubai resident, filed a lawsuit against Marathon Patent Group, Inc. (“MARA”) and other unnamed Defendants. HO claims that, in early 2020, he obtained information about unused electricity capacity from Beowulf Energy, which he believed could benefit MARA. Before disclosing details, HO insisted on a contract to secure his profits and prevent MARA from bypassing him.

HO and MARA agreed to a written or implied contract. The key terms included MARA’s agreement to maintain confidentiality and not to use the information for purposes other than energy-related opportunities. Additionally, MARA promised not to circumvent HO for profit, and any breach would entitle HO to commissions. The agreement also stipulated that the non-disclosure obligations would last for three years.

After the agreement, HO provided the information to MARA through CEO Merrick Okamoto. However, MARA allegedly failed to engage with HO, used the information to secure a deal with Beowulf without compensating him, and bypassed HO to make profits. As a result, HO claims that MARA breached the contract and caused him significant financial harm by using his proprietary information for its own benefit.

HO argues that MARA’s actions deprived him of the expected profits and benefits from his work, leading to his losses.

Damages

As a direct result of the Defendants’ actions, HO suffered damages exceeding $30,000,000. Ho sought restitution and disgorgement of unjust enrichment, claiming at least the amount of financial benefit received by the Defendant.

Key Arguments and Proceedings

Legal Representation

  • Plaintiff(s): Michael Ho
    • Counsel for Plaintiff(s): David W Affeld | Gregg D Zucker | Adeline Leslie Black | Brian R England | Damion D. D. Robinson | Edward Eric Johnson
  • Defendant(s): Marathon Patent Group, Inc. a Nevada corporation
    • Counsel for Defendant(s): Brad Dennis Brian | Kimberly Marie Jansen | Todd R. Wulffson | Adelyn Mary Vigran | Arianna M. Scavetti | Desiree J Ho | Jeffrey Ying-Ting Wu | Jonathan D. Polkes | Lindsay Ann Ayers | Yehudah L Buchweitz | Zachary D. Tripp

Claims

First Cause of Action: Breach of Written Contract (Against MARA)
HO stated that he and MARA had entered into a written contract. The agreement prohibited MARA from using HO’s Proprietary Information without permission and prevented them from circumventing HO or failing to compensate him. HO had performed all obligations, and any failure to perform was due to MARA’s refusal to engage meaningfully after HO shared information about Beowulf. MARA breached the contract by using HO’s information without authorization and entering a deal with Beowulf without compensating HO. As a result, HO suffered damages exceeding $30,000,000.

Second Cause of Action: Breach of Implied Contract (Against MARA)
Alternatively, HO argued that an implied contract had existed. HO had provided information to MARA, expecting compensation for its use. MARA’s acceptance of the information created an implied agreement to pay. By using HO’s information without permission and entering a deal with Beowulf, MARA breached this implied contract.

Third Cause of Action: Quasi-Contract (Against MARA)
Alternatively, HO claimed that a quasi-contract had arisen because MARA knowingly used his proprietary information and benefited without compensating him. Retaining these benefits without restitution would have been inequitable.

Fourth Cause of Action: Services Rendered (Against MARA)
HO asserted that MARA owed him for services provided, which had benefited the company but were unjustly retained without compensation.

Fifth Cause of Action: Intentional Interference with Prospective Economic Relations (Against All Defendants)
HO alleged that Defendants had intentionally interfered with his prospective relationship with Beowulf. By breaching confidentiality and entering a deal with Beowulf, Defendants disrupted HO’s expected benefits, causing him harm.

Sixth Cause of Action: Negligent Interference with Prospective Economic Relations (Against All Defendants)
Alternatively, HO claimed that Defendants had negligently interfered with his economic advantage by failing to act with reasonable care, directly causing harm to his relationship with Beowulf.

Defense

MARA responded to Plaintiff Michael Ho’s Complaint, arguing that the allegations failed to establish a valid cause of action. MARA denied any wrongdoing, asserting full compliance with its obligations and claiming that the claims were barred by the statute of limitations, the statute of frauds, and lack of consideration.

The defense also argued that Plaintiff waived his right to relief, failed to mitigate damages, and brought the claims in bad faith.  Additionally, MARA contended that Plaintiff suffered no actual loss, any recovery would unjustly enrich him, and no punitive damages should be awarded.

Jury Verdict

On July 18, 2024, the jury unanimously found that Marathon Patent Group had breached the contract and the breach was the direct cause of Ho’s harm. The jury awarded Ho $138 million in damages. Further, the jury rejected the unclean hands claim alleging that Ho had indulged in inequitable conduct.

Court Documents:

Available upon request

Press Release:

Hedge Fund Alpha