A fight for control
The newest lawsuit has been filed in a District Court of the Fujian province of China. The lawsuit named Fujian Zhanhua Intelligence Technologies, a fully-owned subsidiary of cryptocurrency exchanges Bitmain. It also lists Bitmain Technologies as a related third party in the case. According to a notice by the court, the first hearing on the case was scheduled for February 11. However, it could have been postponed because of the Coronavirus outbreak in the country. The exact allegations related to the case are unknown but the court hinted that it is related to a “shareholder qualification confirmation dispute.”
The case will add to an existing case in the Cayman Islands. Zhan filed the case in 2013 alongside Bitmain co-founder Jihan Wu. The lawsuit created troubled related to the effects of the world’s larger miner, its control and its planned IPO in the US. Note that the parent company of Bitmain is registered in the Cayman Islands. The lawsuit by Zhan asked the court to declare a decision taken at a shareholder meeting void. The decision cut down his voting power at the company significantly. His lawyers said that Zhan, who was a big shareholder at the company, was not informed about the meeting in advance.
Zhan is not leaving any stones unturned
Before filing a second case in China, Zhan made an asset-protection petition in December last year. The court’s full judgment in the case was made available last week. In the decision, the court agreed to freeze 36% of Fujian Zhanhua’s shares. The company has 10 million yuan incorporated shares of which 3.6 million yuan or $500,000 dollars’ worth is now frozen. The value of these assets is not too big but it could assert Zhan’s power over the company.
Note that 100% of the company’s shares are owned by BitMain Technologies Holding, the Cayman Island registered to hold parent company of Bitmain. Zhan holds 36% of the holding company and is its largest shareholder, which means that he also owns 36% of Fujian. The move to freeze 36% assets of the company will help Zhan prevent his power from being diluted or transferred. The order will also prevent Bitmain from pledging these shares as collateral.