Bitmain Restructures in the Face of Class Action Lawsuit

Bitmain Restructures in the Face of Class Action Lawsuit

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Bitmain, the creator of popular Bitcoin mining hardware and owner of the second largest Bitcoin mining pool in the world, has a rocky road in front of it. The recent debacle with regards to its IPO has seen a number of board level changes and even some community chatter on a possible class action lawsuit.

A blog post explains leadership changes

The company recently released a blog post detailing the changes made at the highest level and gave some clarification on what it intends to do following its expired IPO with the Honk Kong Stock Exchange. While the blog post did mention that the IPO process had helped the company to become „more transparent and standardized“, industry insiders are worried that a second attempt at an IPO could raise even more questions about the future of the company.

A speculative news report released in November of 2018, cited inside sources claiming there would be a change at the top level of the company in a short time. While no one was able to substantiate those rumors with concrete evidence, it seems that the report was correct.

Co-founders and co-CEOs Jihan Wu and Micree Zhan have stepped down from the Chief Executive position and will continue on as ordinary directors of the company. The previous speculative report, based on nothing more than rumors, turned out to be correct that the person who would fill in their position as CEO would be Haichao Wang. The blog post did mention that the two co-founders would stay on to „guide the company’s strategic development“.

One strategic development the two were working however, does not seem to have gone down well with early investors. The blog post mentioned that the IPO listing with the HKSE had “reached its 6-month expiration date”. It was intended to raise $3 billion and help early backers of the company to realize a profit on their investments. The problem came in when they filed for the IPO. There were irregularities with the reporting of financial data, with Q1 and Q2 revenue being included together instead of being shown separately. This was compounded by the fact that in Q2 the company had lost $400 million.

Early backers angry, looking to court action

One vocal member of the community, going by the pseudonym BTCKING555, lashed out at the blog post and promised that affected backers would likely instigate court proceedings against the company. He claims the CEO Jihan and the company’s CFO had lied about the numbers they presented to backers.

He also mentions that the company lied about the investors that it had found to go with the IPO – citing large names in the Chinese tech space Tencent and Softbank. Later investigations done by various news outlets revealed that Softbank had denied it had any involvement with Bitmain in any capacity, including the IPO. Tencent never gave an answer but the general consensus was that they too were not involved beyond being named by Jihan.

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About Ali Raza

A journalist, with experience in web journalism and marketing. Ali holds a master degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.