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Bitcoin mining hardware manufacturer Canaan has filed a lawsuit in China against HighSharp, the chip design partner of AGM Holdings, a new Bitcoin ASIC chip manufacturer in the market.

According to court filings, Canaan is suing Shenzhen HighSharp and Sichuan Yinbimei for making and selling Bitcoin mining chips and hardware allegedly based on designs previously patented by Canaan.

The Nasdaq-listed manufacturer is demanding that the defendants to cease the production of their machines and to pay damages of 90 million yuan, or $14 million. HighSharp couldn’t be reached for comment at press time.

HighSharp was founded in 2016 with a focus on integrated circuit design by Li Chenjun and Wangxing, who debuted a Bitcoin ASIC chip in 2013 called the Clam Miner but failed to materialize the business.

As The Block reported previously, AGM was, until September, an accounting and enterprise resource planning software company listed on Nasdaq with no prior experience in the cryptocurrency space. It announced a pivot into making Bitcoin ASIC miners over the summer and hired Li from HighSharp to be its co-CEO and chairman.

AGM further struck a partnership deal with HighSharp whereby HighSharp will prioritize its Bitcoin ASIC chip design to AGM, which, in return, will source buyers for orders worth at least $100 million by March next year. 

Last month, AGM announced the pre-order sales of over 50,000 units of its KOI C16 Bitcoin ASIC chips to Canada-based hardware maker MinerVA, which is then bound to ship at least 45,000 units of its latest generation of equipment to U.S Bitcoin mining firms Stronghold Digital and Terawulf.

On Wednesday, AGM further announced a pre-order sale for another 10,000 units to U.S-listed Chinese Bitcoin mining firm CCNC worth $65 million.

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