Business

Erik Gibbs

Bitmain launches lawsuit against rival

Bitmain, once a cryptocurrency mining giant, is looking to make up for its losses the old-fashioned way – through a lawsuit. It is suing a trio of former employees who struck out on their own with a rival mining pool, and hopes that a court will side with it, awarding the $4 million in damages it seeks.

Bitmain, which operates the BTC.com mining pool, asserts that the founders of the Poolin crypto mining pool launched their endeavor in violation of a non-compete agreement they had with the company. This, it argues, is worth $4.3 million, which should be paid by Poolin’s CEO, Zhibiao Pan. Also mentioned in the lawsuit are the company’s chief operating officer, Fa Zhu, and its chief technology officer, Tianzhao Li.

However, the three aren’t operating in violation of the non-compete agreement. They allegedly had not received contractually-obligated compensation, which voided the agreement. All three sued Bitmain before the mining company could submit its lawsuit against them, looking for the courts to approve the non-compete agreement null and void.

According to Zhu’s own account of what has transpired, the three were working for Bitmain in 2015 when they suggested the creation of BTC.com. Bitmain initially didn’t like the idea, so they used their own capital to launch the operation. The following year, Pan created open-source code that made it easier for others to launch their own mining pools, and the three left Bitmain in the summer of 2017. Poolin launched that year, but it didn’t mine Bitcoin Core (BTC), which was the digital currency specified in the non-compete agreement.

When they left, they signed non-compete agreements that stipulated that Pan would receive $2,780 each month for 24 months, and which prohibited him from launching a mining pool. The other two were most likely offered some type of compensation, but it hasn’t been revealed. However, as it has done with most of its financial responsibilities, Bitmain fell behind on its payments and, per the non-compete agreement, this voided that contract. It wasn’t until after this point that Poolin began mining BTC.

If the non-compete agreement specifically states that the contract is voided in the event payments aren’t received on time, then Bitmain has no case. However, no word on whether or not a judge has ruled either way has been made available.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as SegWitCoin BTC coins. Altcoins, which value privacy, anonymity, and distance from government intervention, are referenced as dark coins.

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