Bitmain's Feuding Co-Founders Are Fracturing the Firm and Staff Are Caught in the Middle

Staff at Bitmain now have a decision to make: whether to return to the office and which executive they choose to take orders from.

Micree Zhan Ketuan, the Bitmain co-founder who was ousted in a coup by his rival Wu Jihan last October, sent out a letter addressed to Bitmain employees via his WeChat feed on Thursday, saying he had returned to the company's Beijing office starting from June 3.

He further called for staffers at Bitmain to return to the office to join him and said he will "lead the company to complete an initial public offering as soon as possible and push Bitmain's market capitalization to over $50 billion in the next three to five years."

Due to the impact of the coronavirus outbreak, most of Bitmain's Beijing staff have been working from home since earlier this year. A video circulating online and verified by Chinese crypto media source BlockBeats shows that Zhan led a group of private guards and forcefully entered Bitmain's office in Beijing on Wednesday.

According to one Bitmain employee, who spoke to CoinDesk under the condition of anonymity, Zhan was also handing out cash bonuses worth 10,000 yuan ($1,500) to those returning yesterday and 5,000 yuan ($700) for those that turned up today.

The news marks the latest twist in Bitmain's bitter internal fight which has cast doubts among investors and customers over the management of the world's largest bitcoin miner manufacturer.

Recently the dispute even descended into physical confrontation between the management factions as Zhan regained his official status as a legal representative of the Beijing Bitmain Technology Limited, the main operating entity of Bitmain.

Twin seals

Going by Zhan's letter on Thursday, it also looks like there's been a "hard fork" of the company's official seal, of which there are now appears to be two.

Early last month, as Zhan recovered his status as legal representative of Beijing Bitmain, he was entitled to receive a new business license for the company issued by a Beijing government agency that oversees corporate registrations.

However, at the time, Zhan was not in possession of the official seal of Beijing Bitmain. In China, a company's official seal is as important as the role of the legal representative in terms of signing a company's decision into effect. Forging an official seal is an offense under China's criminal laws.

Since the tussle at the government office, Bitmain has been discussing with staff the transferring of their employment contracts from Beijing Bitmain to another parallel subsidiary, Beijing Guiyuan Dalu, according to one person familiar with the plan. Like Beijing Bitmain, the new entity is wholly owned by Bitmain Technologies Hong Kong and was officially registered on May 26. But the legal representative of Beijing Guiyuan Dalu is not Zhan.

On May 27, it was reported by Chinese crypto media that Zhan had issued a document on May 25 in an effort to fire Liu Luyao from his role as Bitmain's CFO, who was also involved in the May confrontation.

The document, signed by Zhan, did not bear the official seal of Bitmain. On the same day, Beijing Bitmain issued a statement with the official seal via its WeChat account, saying Zhan had no authority to act as a legal representative to give notices or directions to its staff.

The firm further said it was in possession of the effective official seal with a serial number of 1101070056574 and no employees should take Zhan's directions or otherwise it will take legal actions.

However, Zhan's June 4 letter bears a different official seal for Beijing Bitmain with a serial number of 1101081651178. Zhan also posted a statement on June 3 saying the previous seal – ending in 6574 – had been voided.

In the latest chapter of the saga, Bitmain issued a statement via its official WeChat account on Wednesday accusing Zhan of forging an official seal of the company and said it has hired lawyers to take legal action against him.

Zhan already has ongoing legal cases against Bitmain regarding his voting power in the company in the Cayman Islands, where Bitmain's ultimate controlling holding entity resides.

EDIT (14:49 UTC): Added new information about bonuses being offered for returning to work.