Bitmain rival MicroBT’s founder arrested on embezzlement charges

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Yang Zuoxing, founder and CEO of cryptocurrency miner maker and Bitmain rival MicroBT, has been arrested and charged with embezzling nearly 100,000 yuan (US$15,000), Chinese online business publication Caixin reported. MicroBT manufactures the WhatsMiner ASIC mining machine, which accounts for about 40% of the market share.

The arrest was confirmed by the Shenzhen Nanshan District Prosecutor in a notice on Dec. 12, noting the criminal case is still ongoing. In keeping with standard practices, the notice failed to include Yang’s full name practice. It follows reports in November that the MicroBT executive was taken away by Shenzhen police to assist an investigation over possible IP disputes. 

The arrest also comes at a time when MicroBT is gaining market share in the ASIC miner manufacturing business while Bitmain’s dominance is waning. Notably, Yang was taken into custody by police after Jihan Wu regained control of Bitmain during an internal power struggle by ousting his co-founder Micree Zhan.

Yang was a design director at Bitmain Technologies Ltd., responsible for developing the mining giant’s flagship AntMiner S7 and S9 models around 2016. He left the company to start MicroBT after negotiation over equity fell through with Bitmain co-founders Wu and Zhan. 

Bitmain accused Yang of taking all the S9 codes when he left the company and leaking the source code to other mining machine makers. Bitmain pursued a civil case against Yang and MicroBT in 2017, alleging him of infringing their patent. Yang’s legal team successfully appealed to the intellectual property court in China to void Bitmain’s patent award leading to the dismissal of the civil case.

Representatives of MicroBT and Bitmain declined to comment on the pending case. Prosecutor didn’t specify whether the alleged misappropriation links to MicroBT or Yang’s former employer. 

The Caixin story mentioned the arrest tracks with Bitmain’s move to escalate its failed civil lawsuit against Yang into a criminal case. The firm allegedly reported Yang to police in Beijing, accusing him of infringing on trade secrets. Bitmain has waged legal battles against other prominent ex-staffers. Earlier this year, it filed a lawsuit against former employees who started rival mining pool Poolin, alleging they were violating a non-compete agreement.