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CoinTerra Silent Amid Alleged Cloud Mining Payout Freeze

(@joonian) | Published on January 8, 2015 at 03:30 BST

CointerraBitcoin mining hardware firm CoinTerra has been the subject of speculation this week, as emails purportedly sent by the company to customers of its cloud mining service suggest the firm has defaulted on debt obligations.

The email, signed by a representative of the CoinTerra support staff, claims that the firm is no longer capable of making payouts to customers.

The message reads:

"The company has defaulted on its secured notes. The note holders have senior, secured and, we believe, perfected liens on all of CoinTerra's assets, including servers. We have proposed a plan to the note holders. However, at this point we do not know how they are going to react to our proposal. The note holders are evaluating their options. Until this is resolved, CoinTerra will be unable to make further payments."

CoinDesk contacted several members of CoinTerra’s staff, including treasurer Pradeep Kumar Cheruvathoor and PR representative Daniel Larsson, but no official confirmation on either the default or the payout stoppages has been received.

What we know

Email headers from two of the messages purportedly from CoinTerra are consistent and both show that they were sent from CoinTerra’s support account at ZenDesk.

Notably, CoinTerra’s website is operational despite the reported service disruption. While cloud mining products are currently listed as "out of stock", CoinDesk was able to move a hardware purchase to checkout.

CoinTerra has experienced service problems in the past, including performance issues and security incidents, and has faced scrutiny from both customers and third-party organizations like the US Better Business Bureau. The company has also faced legal hurdles, including a class-action lawsuit earlier this year.

What we don’t know

The email shared by both Reddit users and community members is currently unconfirmed by CoinTerra.

The reported payout stoppages are said to have begun in the last weeks of December, though the exact nature of the interruption is not known at this time. One Redditor claimed to have received a payout on 19th December, while a CoinDesk reader reported that he hasn't been issued payment since the 20th.

The email text states that CoinTerra has defaulted on its “secured notes”, a form of debt. The note-holders, according to the email, have a claim on the firm’s assets because of the default, including its miners and server space.

The email further claims that until a decision has been reached among those who own the company’s debt, no payouts will be processed, adding:

“What this means is that we cannot issue any payments to customers at this time. Rest assured we will let you know if this situation changes or if there are any relevant new developments but, for now, we have no further information.”

More information on the company can be found here.

Additional reporting provided by Stan Higgins

CoinTerraMining

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