A fight broke out at a government office in Beijing after local authorities tried to hand the company’s operating license to ousted co-founder Zhan Ketuan. Bitmain is the world’s largest manufacturer of bitcoin mining rigs.
Why it matters: The latest co-founder spat adds to a series of layoffs, regulatory interventions and IPO turmoil at one of China’s biggest blockchain companies. The situation is at a standstill and it is uncertain who will lead Bitmain in the future.
- With bitcoin prices soaring this week after a dramatic drop in mid-March, the stakes at Bitmain are high.
- Fluctuating bitcoin prices and the upcoming bitcoin halving on May 12 have severly affected Bitmain’s operations.
- The company has accused Beijing authorities of violating corporate law.
Details: The Market Administration of Beijing’s Haidian district summoned a meeting to hand over Bitmain’s business license to ousted co-founder Zhan Ketuan.
- Bitmain CFO and legal representative Liu Luyao and company lawyers represented the company. CEO and co-founder Wu Jihan, who led the coup against Zhan, was reportedly not present.
- Authorities backed Zhan’s claim that the change of the company’s legal representative was invalid. Zhan claimed a document submitted by Wu to change the legal representative did not follow proper procedures.
- Liu said, “The business license belongs to the company’s property, how can it be handed over to an individual.”
- Liu argued that since the matter is not one of forgery, an administrative organ cannot intervene.
- A physical brawl broke out and someone at the scene called the police.
- The decision violates corporate law by infringing on the company’s autonomy, Bitmain said in an official statement.
- The company will not accept any “illegal acts” by Zhan pretending to be Bitmain’s legal representative.
Context: In October 2019, Wu sent an email to employees threatening them with termination of contract if they took any orders from Zhan or attended any meetings he held.
- The news came as a surprise since Wu had stepped back as Bitmain’s CEO to lead his own cryptocurrency startup.
- Zhan would not go down without a fight. He sued Bitmain’s parent company in the Cayman Islands. Zhan filed a complaint with Haidian district in November 2019, requesting the cancellation of the paperwork that ousted him. He filed the same complaint in February 2020, the result of which was the fistfight at the government office.
- When they found Bitmain in 2013, Wu and Zhan rode a historic crypto boom that made them into billionaires.
- But the two co-founders did not see eye to eye on the company’s future. When Wu took over, he undid a lot of Zhan’s initiatives that had yet to make a profit, including a push into AI chips.
- A heightened regulatory clampdown on cryptocurrencies in China, starting in 2017, has hit the company. In December 2019, authorities froze $1 million of Bitmain assets.