This note, available here, describes the first ever blockchain antitrust case.

In December 2018, UnitedCorp, a diversified technology company, sued Bitmain, the largest Bitcoin mining pool, in the first blockchain dispute with a focus on antitrust (United American Corp. v. Bitmain, Inc. Complaint). The case, pending before the District Court for the Southern District of Florida, is at its core a familiar collusion claim.


The facts and allegations are as follows.

UnitedCorp offers a number of blockchain solutions. These include BlockNum, which allows the execution of blockchain transactions using regular phone numbers; and BlockchainDome, a cryptocurrency mining system that uses the heat generated from the mining process to heat greenhouses for agricultural purposes. Both technologies rely on a cryptocurrency called Bitcoin Cash, one of the hundreds of publicly available (permissionless) cryptocurrencies. As with other cryptocurrencies, Bitcoin Cash’s whitepaper and protocols set out its rules and governance.

In November 2018, protocol developers disagreed on how to update Bitcoin Cash’s protocols. This resulted in a split between two different camps (called forks in blockchain parlance): Bitcoin ABC and Bitcoin SV. When splits like this occur, it is up to miners to choose which fork they prefer to support (by mining for their preferred fork). Of the two forks, Bitcoin ABC garnered greater the most support and succeeded Bitcoin Cash in name and in ticker (BCH). However, the battle between the two forks to gain miners’ buy-in caused the combined value of the two forks to drop below the levels of the formerly unified Bitcoin Cash cryptocurrency.

UnitedCorp alleges that a number of investors, mining pools (groups of miners that combine their mining resources), crypto-exchanges and protocol developers colluded to get as many miners as possible to support the Bitcoin ABC fork over the Bitcoin SV fork. The collusion led to the prices of both forks falling to levels below those of the unified Bitcoin Cash cryptocurrency before the forking, resulting in financial harm.

The article then turns to the question of who in the crypto-economy can actually bring an antitrust case.

In antitrust cases between private parties in the US, plaintiffs must prove that the defendant’s actions harmed them in order to have standing. The US courts have interpreted this requirement to mean that plaintiffs must prove that they were directly harmed by the defendant’s actions, not just that they incurred harm indirectly by doing business somewhere along the value chain.

UnitedCorp does not specify in what capacity it was harmed. While there are a number of possibilities, it is doubtful that UnitedCorp has standing under US antitrust harm:

  • Harm as an investor – If UnitedCorp claims financial losses as an investor in Bitcoin Cash, or as an entrepreneur in the broader cryptocurrency market, this harm would not have been suffered directly as a result of the purported collusion. After all, none of the stakeholder-defendants provides direct investment services to UnitedCorp.
  • Harm as a miner – If UnitedCorp claims damages as a miner, a court would have to determine who provides services directly to miners in a blockchain. The most plausible answer seems to be protocol developers, for they provide the infrastructure on which miners operate. This answer, however, leads to a different problem: is the “service” provided by protocol developers the kind of service that antitrust law is concerned with? Antitrust law safeguards commercial activity by undertakings, i.e. activity meant to be part of commerce and the market mechanism. It is not obvious that the development of blockchain protocols fulfils this requirement; instead, developing blockchain protocols can be characterised as a research, educational or generally non-market project. The fact that blockchain protocols can be used to underpin market-related activities does not make their development inherently commercial, the same way that contributing to the development of Linux does not necessarily make a Linux programmer a market actor, despite versions of Linux being sold commercially.

Crypto-exchanges and wallets could also be said to provide services to miners by channelling transactions toward them. However, the direct service recipients of crypto-exchanges and wallets seem to be users/spenders, who in turn generate transactions that miners will process.

  • Harm as a spender – If UnitedCorp claims to be acting as a spender of Bitcoin Cash, presumably as operator of its BlockNum system, then the direct service providers would be miners, since it is they who process the transactions proposed by users/spenders.

The next section looks at whether UnitedCorp suffered antitrust harm.

For antitrust law purposes, harm is by and large construed as consumer harm, or, under a more liberal interpretation, harm to the competitive process. UnitedCorp’s financial losses seem to be of a different kind.

In terms of consumer harm, the only relevant allegations seem to be around how Bitcoin Cash’s devaluation might translate into harm for UnitedCorp – but it is unclear how this might amount to antitrust harm. If one were willing to take a broader approach and include protecting the competitive process as a relevant goal of antitrust law, then this would require UnitedCorp to show that the defendants’ actions distorted the competitive process in such a way as to cause it harm. This claim seems even less likely to succeed: even assuming that UnitedCorp is competing in any of the relevant markets, in none of them does UnitedCorp set out how its harms relates to the competitive process. Instead, UnitedCorp only establishes harm to a competitor, itself.

The note then turns into whether changing protocols and trying to attract blockchain users to a specific fork amounts to anticompetitive collusion.

UnitedCorp alleges that defendants, including investors, mining pools, crypto-exchanges and protocol developers conspired with each other to transfer hashing power to the mining of Bitcoin ABC and steer market participants away from Bitcoin SV. They did so, according to UnitedCorp, by shifting mining capacity from other cryptocurrencies to Bitcoin ABC, and by presenting Bitcoin SV as unreliable. This not only harmed Bitcoin SV specifically, but also undermined trust in Bitcoin Cash generally, contributing to the drop in its value.

However, and even assuming that some kind of collusion to the effect claimed by UnitedCorp took place, it seems unlikely that it would amount to an unlawful restraint of trade. Firstly, the defendants’ campaign to attract hashing power into the Bitcoin Cash network appears to amount to an effort to expand capacity to capture a bigger share of the market, which is hardly anticompetitive. Antitrust law is usually concerned with output limitations that result in price hikes, not output increases that end up serving more demand. Secondly, both forks of this blockchain ramped up hashing power. Thus, the conduct complained of seems to be merely a form of competition, which is the opposite of anticompetitive conduct. Thirdly, even if the crux of UnitedCorp’s complaint were that the process was manipulated – i.e. the mining results did not come about organically or naturally – it is uncertain this argument would succeed in court. After all, the supposed manipulation was contained in a protocol whitepaper. Whitepapers are not binding nor do they mandate an industry modus operandi from which business actors are not supposed to deviate. Furthermore, the supposed manipulation consisted in the introduction of a checkpoint that could be said to work to preserve the integrity of the blockchain, and hence is likely to be procompetitive.

The piece concludes with the implications of this case for the application of antitrust to the blockchain.

While it is questionable whether the lawsuit will achieve its goal, it has the potential to establish legal firsts applicable in other blockchain cases. To find, for example, that mining mobilization can underpin an antitrust offense would risk implicitly acknowledging that cryptocurrency whitepapers are legally binding. Similarly, granting standing to UnitedCorp would imply the adoption of a particular view of the structure of the cryptoasset value chain, and establish (for legal purposes) a direct commercial relationship between two players of the crypto-economy.

On the other hand, if the court is inclined to reject the plaintiff’s claims, it should carefully delineate the contours of the procedural and substantive standards and requirements that must be met for a case to be successfully. A broad-sweeping exclusion of cryptoasset activities or actors from antitrust’s ambit could spell unanticipated challenges in future cases, when both the nature of the activities and the role of the actors will be clearer.



I think this note elegantly brings out the various challenges that blockchain structures create for antitrust enforcement. The author’s analysis left me wondering about the circumstances in which protocol design could amount to collusive conduct, which is something that could have been discussed in greater detail. Regardless, this is a good intro into how blockchain cases might look like – we will be seeing more of them in the future.

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