Bitmain’s CFO Luyao Liu was arrested by Beijing police after co-founder Micree Zhan was robbed of a business license for Bitmain Beijing

Bitmain’s chief financial officer, Luyao Liu, was arrested after allegedly partaking in a mob attack on the company’s ousted co-founder Micree Zhan in Beijing, local reports suggest.

Photo: Micree Zhan, co-founder of Bitmain Technologies (front right) waits to receive a new business registration license at the Beijing Haidian District Government Service Center. Photo: Hu Yue/Caixin

Aides of Bitmain’s co-founders got into a fight over possession of the company’s registration license. The clash attracted police to the scene. Both groups were taken to a local police station.

The power struggle started last October when Micree Zhan, co-founder of the largest maker of equipment to mine digital coins, was ousted by his partner Wu Jihan, who declared himself the legal representative of the company. The parties then took the dispute to the Beijing Haidian District Market Administration, which resulted in an administrative ruling granting Zhan the right to recover the company from Wu.

Micree Zhan

On Friday morning, as officials of the Beijing Haidian District Market Administration Bureau handed over the new business registration license to Zhan as part of the recovery process, Bitmain’s Chief Financial Officer Liu Luyao abruptly grabbed the license.

“The business license is company property ― how can it fall into the hands of an individual?” Liu said.

Liu was representing Wu, who was not at the scene. He was surrounded by about a dozen men. They clashed with Zhan and his two lawyers.

“People got hit,” someone shouted before the police arrived.

According to Primitive Ventures’ founding partner and prominent industry commentator Dovey Wan, Zhan was hassled by a group of masked men at the Beijing Municipal Administration of Industry and Commerce, where he had just reportedly received a business license for Bitmain Beijing, thereby becoming the company’s legal representative.

She also attached a video clip showing a run-in between two groups of men wearing black sweatsuits and face masks. Liu was arrested approximately two hours after the altercation, Wan wrote, adding that “this Bitmain shitshow is now trending #21 at national level on Chinese Weibo.”

In a statement issued Friday, Bitmain blasted the market administration, saying the decision to reverse the registration was a “mistake” by the government agency that “has severely violated the company law.”

The company said it will not acknowledge any action taken by Zhan as legal representative and reserves the right to file legal claims against Zhan and related parties.

Zhan and Wu co-founded Bitmain in 2013 and rode the wave of a crypto mining boom that made them billionaires. Sources close to the company told Caixin that there were long-held disagreements between them over the growth and direction of the company and how to navigate the volatility of the cryptocurrency market. Demand went through a severe downturn after China started a crackdown on the industry in 2017.

In his motion to reinstate his position, Zhan alleged that a document Wu submitted to the Haidian District Market Administration to change the legal representative was smeared and modified, which made the registration change invalid.

But Wu’s team argued that Zhan was making a big fuss about a minor blemish in the document. Liu told Caixin that the document was modified under the direction of the staff at the Haidian market administration.

Bitmain at one time controlled 80% of the market for semiconductors used for mining cryptocurrencies. After its last round of private funding in 2018, the company’s value was estimate to be as much as $14 billion. The company has been on a roller coaster as the price of cryptocurrencies fluctuated wildly.

The Company’s Unusual Standing Going Forward 

While the two sides continue to argue, Bitmain’s business has been in some murky waters. Earlier this week, Samson Mow, Chief Strategy Officer (CSO) of blockchain infrastructure firm Blockstream, explained via Twitter that the company’s new flagship products – the Antminer s17 and T17 – had experienced some significant technical issues. 

As Mow’s tweet explained, customers have reported issues with the mining rigs’ power supply fans. The rigs’ heat sinks have also reportedly been falling off, thus causing them to short out. 

However, the firm also appears to be getting back on its feet at the same time. Industry blog Wu Said Blockchain reported earlier this week that Bitmain has already made about $300 million this year alone. The source added that the firm has also gained more market share, as it propped up the hash rate on two of its mining firms and opened two new locations.

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