A bitcoin mining firm has filed a lawsuit against K&L Gates, accusing the law firm of mishandling a critical bankruptcy filing and charging exorbitant, unjustified legal fees. Gryphon Digital Mining, in a case lodged this week in Manhattan federal court, claims the law firm’s neglect led to a costly $24 million lawsuit and left the company without crucial protection in a bankruptcy case.
Gryphon’s complaint centers around K&L Gates’ failure to file a “proof of claim” in the bankruptcy of Core Scientific Inc., a standard legal move to secure creditor rights. The suit asserts that despite being paid over $2.7 million in legal fees, the firm failed to perform essential tasks, and much of the billing lacked transparency or proper documentation. The mining company contends that the fees were excessive and not justified by the work allegedly performed.
The lawsuit also names Robert Honeywell, a New York-based partner at K&L Gates with a focus on bankruptcy law. While the firm has yet to respond, the case highlights a broader legal drama. Gryphon had enlisted K&L Gates in 2021 when preparing for a merger with Sphere 3D, another player in the bitcoin mining industry. Although the merger fell through, an agreement between Gryphon and Core Scientific for a $35 million infrastructure deal remained in place.
When Core filed for bankruptcy in late 2022, Gryphon claims that K&L Gates neglected to track the proceedings and missed an April 2023 filing deadline for the proof of claim. As a result, Gryphon was later forced to bring in new legal representation from Hogan Lovells. The oversight triggered a separate $24 million lawsuit by Sphere against Gryphon, accusing the company of breaching fiduciary duties due to the missed filing.
The two parties reached a settlement in March 2025, with Gryphon claiming it was “forced” to relinquish valuable counterclaims in exchange for resolving the breach of fiduciary duty case, which stemmed from K&L Gates’ alleged missteps.
This case is a stark reminder of the stakes involved in high-profile bankruptcy cases and the crucial role of competent legal representation in safeguarding business interests.
