Ex-Bitmain staff, now MicroBT CEO, arrested over alleged IP dispute

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Shenzhen police have arrested Zuoxing Yang, founder and CEO of crypto miner manufacturer MicroBT, Chinese news outlet BlockBeats reported.

Citing sources familiar with the matter, the news outlet reported that Yang was taken into custody following allegations of intellectual property (IP) infringement related to the production of crypto mining hardware by MicroBT as it relates to the technology of rival Bitmain.

Yang was previously the processor design director at Bitmain, who contributed to the design and development of the firm’s flagship AntMiner S7 and S9 models. According to Bloomberg, Yang left Bitmain in 2016 after being refused an equity stake by co-founders Jihan Wu and Micree Zhan. Yang went on to raise over $20 million to found MicroBT, which produces the WhatsMiner series.

Bitmain has already sued Yang and his company in 2017 over alleged infringement of a patent granted to Bitmain for Bitcoin miner-related technology. In 2018, Yang’s legal team successfully appealed to a court in China to have the patent revoked, after which the case was dismissed. China’s State Intellectual Property Office (SIPO) dismissed Bitmain’s copyright due to a lack of unique creativity in Antminer’s design. According to SIPO:

“If a technological solution sought by a patent has different characteristics than existing technologies, but such difference is public knowledge, then it is obvious the solution would incorporate this public knowledge.”

MicroBT has recently grown in competition to top miner manufacturers such as Bitmain and Canaan and has expanded its market share in the bitcoin mining industry.

The current controversy adds to ongoing legal issues associated with Bitmain. There is a bitter battle happening inside Bitmain, where its co-founders are fighting to gain full control over the company. Earlier this year, Bitmain reportedly sued three former employees who started mining pool Poolin, alleging the three violated their non-compete agreements. In this case, Bitmain is seeking $4 million in damages.