A Chinese boardroom drama is set to continue in the Cayman Islands as Bitmain’s ousted co-founder Micree Zhan is taking his power struggle with co-founder Jihan Wu to the Grand Court.
Zhan, who was ousted from the Beijing-based bitcoin mining giant in a surprise move in October, is petitioning the Cayman court to annul a special resolution passed at an extraordinary general meeting on 13 Nov. 2019. The special resolution decreased the voting rights of the company’s Class B shares from 10 votes to one vote per share.
Zhan is believed to be Bitmain’s largest shareholder.
The petition filed by BVI-based Great Simplicity Investment Corporation on 13 Dec. 2019 seeks a declaration by the court that both the extraordinary general meeting and the special resolution passed to change shareholder voting rights were invalid from the outset and unenforceable.
The battle for control of the world’s largest crypto miner escalated in October when the company’s CEO Wu informed Bitmain staff in email that Zhan had been dismissed from his roles at the company. The email warned staff to no longer take any directions from Zhan nor to participate in meetings organised by him.
In a regulatory filing, Wu assumed the roles of executive director and legal representative of Bitmain from Zhan.
In November 2019, Zhan announced he was forced out against his will and would fight for his return to Bitmain through legal means.
Wu and Zhan had served as co-CEOs until March 2019 when they stepped down after Bitmain’s proposed initial public offering on the Hong Kong stock exchange failed amid a prolonged market decline in crypto currencies.
At the time, Bitmain said both would continue to guide the company’s strategic development.
At its peak in 2017, Bitmain controlled about three-quarters of the market for crypto mining rigs – the computer systems used to validate crypto transactions and earn new coins. The company specialises in selling ASIC chips, first developed by Zhan, which power Bitmain’s hardware.
According to the September 2018 IPO filing, Zhan had a 37% stake in Bitmain and Wu held 21% of the company’s shares. Both Zhan and Wu are billionaires, according to Forbes magazine.
In October 2019, Bitmain reportedly filed for a US IPO through which the company aims to raise between $300 million and $500 million in the second half of 2020. Earlier last year, Bitmain announced its intention to enter the market of artificial intelligence as a complementary business area to crypto mining.