A lot has happened with Bitmain over the past couple of years, and we’re just starting to get an idea of the corporate infighting that has brought the company to where it stands now. New documents are giving the crypto world a picture of how co-founder Micree Zhan was ejected from his role as Legal Advisor, and another insider leak suggest legal trouble ahead for the company.
Several documents have now helped spell out exactly what steps were taken by Jihan Wu to get rid of Zhan. Up until October 29, 2019, Zhan was still listed as the Legal Advisor for the mining firm. Despite being the company’s largest shareholder, Zhan was somehow removed from the position, and no longer appeared in that role as of October 30.
News of Zhan’s ouster hit on October 29, and we have an idea of how Wu pulled it off. As other media outlets have reported previously, Bitmain’s rules for voting on an Ordinary resolution required a quorum of only “one third” of class B shares present. While Zhan owns 64% of the company, Wu could hold the vote in his absence with his 36% of shares.
Wu then craftily used these same rules to reduce Zhan’s voting power. Wu held another vote in November to reduce Class B shareholder voting power, which would directly affect Zhan, from 10 votes per share down to 1 vote per share. Zhan is now fighting this change as it was done without any notification sent to him, a requirement of Bitmain’s Articles of Association.
We also now know that Wu has given up the Legal Representative role he nabbed from Zhan. Luyaho Liu, CFO of Bitmain, took over as legal representative on January 2, and has reportedly taken on a much bigger role in the company.
One of the first big developments from Bitmain after Zhan left was its U.S. initial public offering (IPO) application with the Securities and Exchange Commission (SEC). This IPO was suddenly at risk when links to the alleged Ponzi Scheme BitClub were found. This is apparently being taken very seriously by Bitmain.
The Twitter account leaking Bitmain insider info, BTCKING555, has once again uncovered what insiders at the company are saying:
Breaking: the insider says Bitmain USA legal advisors Davis Polk is advising against USA IPO as Bitclub case will have to be disclosed as “material event” and victims can go after public Bitmain for $722 million in damages. Jihan directed not to travel to USA. #bitmainipo
— BTCKING555 (@btcking555) January 20, 2020
Bitmain would be wise to avoid the IPO entirely now as it opens them up to legal vulnerabilities in the U.S. as BitClub’s victims come searching for money. As he later wrote, “Bitmain is a fraud company with cooked books and unethical leadership.”
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