Bitmain Co-Founder Initiates Legal Fight to Return to Control Over Company

Co-founder of crypto mining giant Bitmain, Micree Zhan Ketuan, has initiated court proceedings against the company shareholders in a bid to restores his voting control of the firm.

As BNN Bloomberg reported on Jan. 3, Zhan asked a Cayman Islands court to discredit Bitmain’s shareholders' decision to convert the mining company’s Class B shares to one vote per share, while previously each Class B share had come with ten votes. As such, the shareholders greatly reduced Zhan’s influence over the company.

According to a 2018 initial public offering prospectus, Zhan reportedly owned nearly 4 million Class B shares — almost twice as much as Wu, who is the only other holder of the special stock.

Zhan’s removal without his consent

The conflict between Zhan and Bitmain’s shareholders surfaced in October 2019, when the company’s co-founder, Jihan Wu, announced in an email that Zhan had left the company. The email read: “Bitmain’s co-founder, chairman, legal representative and executive director Jihan Wu has decided to dismiss all roles of Ketuan Zhan, effective immediately.”

Zhan reacted to the announcement dispiritedly, claiming that he had been removed as a legal representative of the company without his consent. At the time, Zhan wrote:

“I didn’t realize until then that those scenes in TV shows, where you get stabbed on your back by those partners you trusted and ‘brothers’ you fought together with, can really happen in real life. [...] Bitmain is our child. I will fight for her till the end with legal weapons. I won’t allow those who want to plot against Bitmain to succeed. If someone wants a war, we will give them one."

Moreover, Wu further warned Bitmain employees against interacting with Zhan, saying:

"Any Bitmain staff shall no longer take any direction from Zhan, or participate in any meeting organized by Zhan. Bitmain may, based on the situation, consider terminating employment contracts of those who violate this note."

Layoffs and asset freezing

Recently, Cointelegraph reported that Bitmain reportedly has plans to reduce its workforce by another fifty percent as part of a so-called “personnel optimization plan.” People familiar with the matter assume that the reason for the layoffs is the upcoming Bitcoin halving, which will cut the number of new coins awarded to miners by half.

In mid-December, 2019, a Chinese court froze roughly $676,000 in assets belonging to Bitmain’s wholly-owned subsidiary, Shenzhen Century Cloud Core. The ruling follows an application submitted by a manufacturer of electronic components, Dongguan Yongjiang Electronics, on Sept. 24.