Bitmain, one of the largest manufacturers of cryptocurrency mining equipment, seems to be in the midst of a legal battle with a rival mining pool. The China-based equipment manufacturer, which owns and operates BTC.com (the most popular mining pool in the world by hash rate) has begun legal proceedings against the founders of Poolin, a rival pool, operated by its former employees, 8BTC reports.
Per the publication, the founders of Poolin are being sued over violating a non-compete agreement, which they signed while working with Bitmain.
The non-compete’s terms reportedly include a monthly payment of $2,780 from Bitmain to Zhibiao Pan, Poolin’s CEO, in exchange for not starting a rival mining company. The compensation paid to Zhibiao’s partners- Polin’s CTO Tianzhao Li and COO Fa Zhu- were not specified. The case has escalated so much that there are reportedly six lawsuits being tried at the Beijing Haidian District Court. Three from Poolin’s co-founders against Bitmain, while the other three are countersuits from Bitmain.
The Poolin founders’ defense rests on the fact that they are no longer bound by the terms of the non-compete. According to their court filings, Bitmain failed to hold up its end of the non-compete agreement, which gave the Poolin founders the freedom to start their own venture.
Bitmain is now suing its rival mining pool operators for a total of $4.3 million, which includes numerous payments from its three ex-employees, a $667,000 fine for violating the terms of the non-compete agreement, and a percentage of all Bitcoins that have ever been mined on Poolin (which, according to its lawyers, were gotten as a result of the ex-employees’ failure to comply with the non-compete).
In addition to the damages and compensation payments being sought, Bitmain’s lawyers are also asking the judge to order Poolin’s executives to honor their non-compete—a request which could signal the end of Poolin as a company, if granted.
The dispute has been quiet for a while, but a court hearing video featuring attorneys from both sides is now available.
Bitmain’s ex-CEO jumps ship
The Poolin founders aren’t the only ex-Bitmain employes to leave the embattled company for greener pastures.
Earlier this month, Blockonomi reported that Jihan Wu, the company’s ex-CEO, is set to launch an over-the-counter (OTC) crypto trading desk.
Citing unnamed sources, The Block’s report claimed that the desk, which was dubbed “Matrix,” would be launching in July. The crypto business would offer custody and lending services to clients globally, but it’s biggest client could be his former employer—Bitmain.
Per a separate source, thanks to the high liquidity that would be passed on from Bitmain, Matrix could provide crypto assets at lower prices, thereby gaining a competitive advantage over competing businesses in Asia. These moves could be a strategic plan from Bitmain to grow into new industries. The report goes on to note that Bitmain had tried to build a custody business internally before deciding to spin off to a separate entity. A custody upstart teaming up with one of the largest miners in the world is a game changer.
eToro Risk Warning: 66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.