MicroBT Founder Arrested on Suspected Embezzlement Charges

Yang Zuoxing, a former chip developer for Bitmain, has been arrested and charged with suspected embezzlement of funds. According to a report on Bloomberg earlier this morning, police in the Nanshan district of Beijing carried out the arrest, after suspicions were raised that the engineer had stolen up to 100,000 Yuan ($15,000). The report failed to clarify whether the suspected funds were stolen from his former employers, although suspicions are that Bitmain might have been involved in this development.

Yang’s History with Bitmain

Yang worked at Bitmain, the largest manufacturer of crypto mining equipment in the world, and held the position of Processor Design Director until 2016. He was one of the instrumental brains behind the Antminer s7 and s9 models, which went on to become flagship products from the firm.

However, things turned sour when Yang asked then co-CEOs Jihan Wu and Micree Ketuan Zhan for an ownership stake in the company he had devoted years to. Both men refused his claims, and he applied his expertise- as well as a handsome $20 million in seed funding from investors- to found a rival firm, MicroBT, in Shenzhen.

From the outset, MicroBT had started to soak up more and more of the market share for mining rigs. The company’s flagship Whatsminer 20 product has so far been one of the best-selling mining rigs in the industry this year, much to the chagrin of his former employers. Since then, both companies have been involved in a spat, and while Bitmain undoubtedly dwarfs MicroBT in both size and revenue stream, the latter has been able to grow steadily, and was even in talks to launch an Initial Public Offering (IPO) in October 2018.

Last month, The Block Beats reported that police in Shenzhen arrested Yang over alleged copyright infringement. Bitmain had sued MicroBT for the same thing back in 2017, although the latter’s lawyers were able to get any restriction orders revoked. While The Block Beats claimed that they had no idea who had instituted the arrest, they had suspicions that it was Wu, since the arrest coincided with his return to Bitmain.

Bitmain’s the Jealous Ex-Boss

This isn’t the first time that Bitmain will be getting into a battle with its former employees who go on to start their own thing. Back in June, the mining giant- which owns BTC.com (the largest mining pool in the world by hash rate) sued the creators of rival mining pool Poolin for allegedly violating a non-compete agreement that they had signed when they left the firm.

At the time, six lawsuits were pending at the Beijing Haidian District Court. The three people who founded Poolin- CEO Zhibiao Pan; COO Fa Zhu; and CTO Tianzhao Li- had all sued Bitmain, seeking to be released from their non-compete, claiming that it had been rendered null and void as Bitmain didn’t pay up on their compensation as at when due.

The mining giant then countersued them, claiming that their operation of a rival mining pool had caused it to suffer significant financial losses. Apart from the $4.3 million sought in damages, Bitmain asked the court to order Poolin’s creators to continue honoring the terms of their non-compete.