The legal dispute between Bitcoin miners Sphere 3D and Gryphon Digital Mining has progressed further on March 25, with Gryphon seeking to block $10 million from a recent settlement through a new legal action.

In a pre-motion letter submitted to the U.S. District Court for the Southern District of New York, Gryphon requests permission to file a motion for prejudgment attachment to secure the $10 million in equity proceeds Sphere recently obtained from a settlement related to Core Scientific’s bankruptcy exit.

Gryphon aims to ensure these funds are available to satisfy any potential judgment resulting from Sphere’s alleged breach of contract, which Gryphon claims has caused damages of at least $30 million. Sphere is accused of violating the exclusivity clause of their agreement with Gryphon by entering into hosting agreements with other providers.

The pre-motion letter highlights concerns about Sphere's financial health, referencing Sphere's own annual report to the Securities and Exchange Commission, which suggests potential bankruptcy and an inability to meet future judgments.

Despite their previous partnership and discussions of a potential merger, the relationship between the two companies soured after Sphere sued Gryphon in April 2023 over an alleged spoofing attack that led to the irregular transfer of Bitcoin.

Gryphon, in addition to disputing the allegations related to the asset transfer, has filed counterclaims against Sphere for breach of contract, negligence, and defamation. The partnership was terminated in October 2023. Cointelegraph attempted to contact Sphere 3D for comment but did not receive an immediate response.