Bitmain Lawsuit Seeks Millions from Staffers Who Founded Rival Mining Pool

The Takeaway

  • Bitmain is suing three former employees who started Poolin, a rival to the chip manufacturer’s BTC.com mining pool.
  • The company is seeking $4 million in damages, alleging the Poolin co-founders violated their non-compete agreements; The former employees say Bitmain voided the non-compete by failing to pay them on time as agreed.
  • The case offers a rare window on Bitmain’s inner-workings and employment practices.

Cryptocurrency mining giant Bitmain is locked in a legal battle with three former employees who started a rival mining pool.

Bitmain, the owner of BTC.com, the world’s top bitcoin mining pool by hash rate, is suing the co-founders of Poolin, the seventh-largest pool, for allegedly violating a non-compete agreement – and it’s demanding $4.3 million in damages from one of them.

For their part, the three Poolin co-founders say they were no longer bound by the non-compete, since it was Bitmain that invalidated their contracts for failing to pay compensation on time as agreed.

The case offers a rare window on the inner workings and employment practices of Bitmain, one of the blockchain industry’s largest and most powerful companies.

Bitmain makes most of its money from selling mining equipment, according to financials disclosed during the firm’s abortive attempt to go public. But it also operates mining pools, essentially software products miners use to split rewards. This service accounted for $43.2 million of Bitmain’s revenues in the first half of 2018, the most recent period for which data is available, compared to $2.7 billion of hardware sales during the same period.

There are six lawsuits pending in the Beijing Haidian District court. The three Poolin co-founders –  CEO Zhibiao Pan; COO Fa Zhu; and CTO Tianzhao Li – each sued Bitmain preemptively, seeking to be released from the non-compete.

Bitmain, in turn, countersued each of them, claiming they caused significant losses to the company after…

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