On Thursday, October 8, 2026, Investment News reported that an investor filed a federal lawsuit accusing Bitcoin mining company Blockware Solutions and six co-defendants of selling unregistered securities in the form of Bitcoin mining products.
The complaint was filed October 7 in the U.S. District Court for the Eastern District of Arkansas by Canary Holler Holdings and its sole manager, Jordan Jarrett. It alleges that Blockware and its affiliate, Luxor Technology Corporation, carried out a coordinated scheme. According to the filing, the defendants sold mining machines paired with restrictive pooling arrangements that functioned as investment contracts, making them securities under federal law. Blockware never registered them, the complaint says.
The plaintiffs say they sent more than $2.6 million to the defendants between November 2024 and July 2026, and that they were drawn in by a financial model the complaint calls the “Mann Spreadsheet.” The filing says Blockware’s director of finance built it as early as June 2015. It projected annualized returns of 46.35% to 67.90%, assumed Bitcoin’s price would rise 3% every month, held electricity costs flat for four years and set machine uptime at 98%, a target the complaint says Blockware never met.
The complaint alleges Blockware’s former chief executive personally recruited the plaintiffs and kept reassuring them as losses grew. When Jarrett said his machines were losing value despite a bull market, the executive allegedly replied that they were not, and urged him to stay the course. The filing further alleges the defendants confined the plaintiffs to a single mining pool run by Luxor and described it as “the Blockware Pools.” When the plaintiffs asked to switch, the then-CEO allegedly said only Luxor was permitted for now.
Blockware’s board removed the chief executive on June 2, 2026, the complaint states. The new chief executive, identified as a former chief operating officer at Riot Platforms, allegedly told the plaintiffs during an October 2025 call that the company’s services were generally offered as-is under its contracts.
The plaintiffs also allege the defendants repeatedly promised exit options but then went silent, canceling calls and ignoring emails for weeks. They contend the delays were deliberate and allowed the one-year rescission window under Section 12(a)(1) of the Securities Act to expire, on November 25, 2025, for the first batch of machines and December 16, 2025, for the second.
By the complaint’s figures, total capital invested was up to $2,588,010.31. Mining revenue totaled roughly 14.271 BTC, valued at about $1,190,617.54 when the suit was filed, leaving a net loss of at least $1,397,392.77.
The suit brings 13 counts. They include securities fraud under Section 10(b) of the Securities Exchange Act and Rule 10b-5; control-person liability under Section 20(a) against each individual defendant and Luxor; rescission under Section 12(a)(2) of the Securities Act; and violations of the Arkansas Securities Act, which the filing says rise to Class B and Class D felony level. The plaintiffs also assert common-law claims of actual or constructive fraud, conversion, replevin, and unjust enrichment. Kutak Rock LLP represents them.
The complaint relies on the Howey test, arguing the plaintiffs invested money in a common enterprise expecting profits from the defendants’ efforts.
Source: Investment News
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