What on Earth Happened at Bitmain? Feud, Coup, Spat, Physical Fight and More
The power struggle inside the bitcoin mining giant Bitmain has once again intensified over these days, as the previously ousted co-founder Micree Ketuan Zhan on Wednesday led a team of guards “break into” Bitmain’s Beijing office to claim his return.
Apart from resorting to the use of force to try to take over the company, meanwhile, Zhan sent out an open letter addressed to Bitmain employees via his WeChat, urging employees’ return to the office as normal work is resuming after the coronavirus pandemic gets controlled in China, and promising he’ll “lead the company to realize an initial public offering as soon as possible and pushing Bitmain’s market cap to over $50 billion in the next three to five years”.
According to an anonymous Bitmain employee, Zhan was also handing out cash bonuses worth $10,000 yuan ($1,500) to reward those who return to join him that day. The company’s employees are now confused and caught in the middle – whether to return to the office and which executive to choose.
The fight even recently descended into physical confrontations as Zhan tries to recover his official status as the company’s legal representative.
Long feud between the dual CEOs
The long and bitter feud between the two cofounders stems from a difference of opinion over the future direction of the company. Zhan believes that the company should aim bigger on AI, while Wu prefers to stay the course to focus on mining.
It appears that having two leaders didn’t work out for Bitmain especially when the company has grown to be the world’s largest bitcoin mining hardware manufacturer and sought to float in the capital market.
In December 2018, the two, for a better future of the company that they jointly started in 2013 and was at that point in a crucial phase in its Hong Kong IPO attempt, seemed to reach agreement and determined to drop the dual-CEO structure.
Wu left and Zhan rose
The sluggish crypto market that year also silenced Wu who is a strong Bitcoin Cash (BCH) advocate and had put a lot into it but suffered heavy losses. The crash of the volatile bitcoin market, and Zhan’s big vision on the seemingly bright AI field, both to his advantage, have emboldened Zhan, who continued to interfere in the company’s daily management despite having stepped down as CEO. Regarding this, Wu has expressed his dissatisfaction, meanwhile, the company showed disagreement with Zhan’s management, and more miner clients are also dissatisfied with their services.
Under the leadership of Zhan, Bitmain is said to have lost a big chunk of market share to its rivals in 2019, and the bitcoin rally in mid-2019, supposed to bring the mining giant large profits, was not seized by the company. Following the external strategy missteps and the major mining machine business being squeezed, in August 2019, Zhan made a structural adjustment inside the company which led to the resignation of a large number of senior staff and triggered internal unrest since then.
Power struggle started
In the face of such internal and external troubles, in October 2019, Wu said he could not sit still and decided to come back to “save” Bitmain. An open power struggle between the two then started after Wu claimed his return and ousted Zhan when he was at that time thousands of miles away from the company’s Beijing headquarter.
Zhan’s position within the company at that point was of an executive director who directly reports to the board and is responsible for carrying out the board’s decisions and legal representative who is held legally accountable for all the company’s operations. Bitmain staff was forbidden by Wu to have any interaction with Zhan who was exiled without any notice or him giving his consent and not allowed to enter the Beijing office.
The drama continues
Ever since, Zhan filed multiple lawsuits in Cayman and China against various entities of Bitmain in a bid to restore his roles in the company.
Among which, the court sided with Zhan to freeze 36% (worth 3.6 million yuan, or $500,000) of Fujian Zhanhua’s 10 million yuan incorporated shares owned by Bitmain in a December lawsuit accompanied by an asset-protection petition.
In May, Zhan scored another legal victory as the Beijing Haidian District Bureau of Justice approved his request to register him as the legal representative. When he was entitled to collect the company’s business license, an official certificate issued by the authority to operate legally, Zhan was mobbed by a group of 50-odd guys led by Bitmain’s former legal representative and CFO Luyao Liu and the license was “robbed”.
Immediately after the license drama, Wu told people not to believe Zhan’s bullshit and accusing publicly that “Zhan has ruined Bitmain’s upward momentum and destroyed over billion dollars of the company’s value”. Meanwhile, Bitmain released an announcement claiming that Zhan has “feigned his status as the legal person of Bitmain which is denied by our company and would be held legally accountable. The business license has been wrongfully registered by the authority.”
A hard fork of the Bitmain Beijing and its official seal
Since then, it seems there has been a “hard fork” of the company, with Zhan trying to convince employees about his legal status and urge them to join him, and Bitmain Beijing on the other side claiming that Zhan had been removed from any roles of the company since October 2019.
There’s even a “hard fork” of the company’s official seal by Zhan. A statement from Zhan’s “Bitmain Beijing” circulating online these days claimed that the previous seal of the company had been invalidated and the new one had come into use since June 1.
Regarding this, the Bitmain Beijing released a statement on June 3 claiming that “since his dismissal, Micree Zhan, continuing to operate under the name of Beijing Bitmain and maliciously interfering in the normal operation of the company, has gone so far as suspected of forging the company’s official seal. The company has hired lawyers to take legal action against him.”
As the drawn-out power struggle inside the company goes on, it has cast doubts among investors and customers over the management and future performance of the world’s largest bitcoin mining hardware manufacturer. Miners have been discussing the possibility of Bitmain’s rival MicroBT to overtake its dominance with its powerful WhatsMiner machines winning praises from miners.