Bittland renewed the complaint with the senior executives, and claimed 30 million from the founder of the coin printing 3

The cryptocurrency mining giant Bit China and three former employees are in legal battle. The three former employees created a mining pool opposite Bitian.

Bitcoin, which has the world's largest bitcoin mine BTC.com, accused the co-founder of the seventh largest pool of Poolin, suspected of violating the non-compete agreement, and demanding about 30 million yuan. penalty for damages.

In response to this part, the co-founder of the three-digit coin printing said that this is because Bitcoin did not pay the compensation limit for the competition as stipulated in the contract on time, and took the lead in violating the contract, so they were no longer bound by the non-compete agreement.

This case gives us a rare look at Bitian, the largest and most powerful company in the blockchain industry, with its internal operations and employment.

Figure | Bit Continental co-founder Wu Jihan (Source: CoinDesk)

According to the financial report disclosed by Bitcoin during the failed listing period, the company's biggest profit comes from the sale of mining equipment. But it also operates the mining pool business, a place where miners contribute their computing power and distribute mining incentives.

The pool service contributed $43.2 million to Bittland in the first half of 2018, which is the latest available data, compared to $2.7 billion in hardware sales over the same period.

There are currently six lawsuits awaiting settlement at the Beijing Haidian District court. The three-coin co-founder, CEO Pan Zhiyi, chief operating officer Zhu Xi, and chief technology officer Li Tianzhao, first filed a lawsuit against Bitland , with the aim of dissolving the non-competition agreement.

Bitumin also filed a counterclaim against them , claiming that they left the post-operating mining pool and had direct competition with the original company, causing heavy losses to the company. In addition to the claim, Bitumin also asked the court to order the top executives of the coin to continue to perform the non-compete agreement.

Figure | Bitland and Pan Zhiyi Labor Dispute Case (Source: Haidian District People's Court)

The dispute has not received much public attention before, but a recent video about a hearing on April 30 was made public, in which the two sides filed their respective complaints. The video only shows the part of the debate between Pan Zhiyi and Bittland, and the exact details of the other two are still unclear.

Birth of BTC.com

The main controversy in these cases comes down to the role played by the founders of the three-coin in BTC.com, which was originally owned by Bitcoin, and the non-compete agreement they signed when they decided to leave Bitland .

In January of this year, Zhu Xi published an article on the tenth anniversary of the commemoration of Bitcoin in the WeChat dynamic post. The article was also reported by a Chinese cryptocurrency media. He briefly introduced three people in the text. The work of the mainland.

In the article, Zhu Xi recalled that in 2015, the three of them – while focusing on the original Antpool of Bitcoin – proposed the launch of BTC.com as a parallel service within the Bitland.

Zhu Xi wrote that this idea was not initially supported by Bitian, so the three had to use Pan Zhiyi's own funds to develop and launch at the beginning. In 2016, Pan Zhiyi specially opened up the code of BTC.com to lower the threshold for those interested in mining business.

The three left the Bittland around mid-2017. In the non-competition agreement, Bitcoin will pay a compensation of 19,250 yuan per month to Pan Zhiyi in exchange for restricting his operation of a special bitcoin mining pool. The compensation for the other two non-compete agreements is not clearly known in this court video.

After leaving Bitland, Pan Zhiyi, Zhu Xi and Li Tianzhao established the Nakamoto Smart Company in November 2017 and operated the currency printing, launching a mining pool that can support multiple cryptocurrency assets. However, it was not until July 2018 that the coin printing began to launch Bitcoin's special pool service, and at the same time, the first block in the largest cryptocurrency of this market value was dug.

Later, the coin printing developed into one of the largest bitcoin mining pools. According to the facts agreed by the parties and submitted to the court, on February 14, 2019, the coin printing was the third largest operator in the world after the BTC.com and the ant mine pool. In total, the miners who had access to the coin-printed pools had dug up 26,825 bitcoins at the time, which was worth $220 million today.

It is worth noting that, according to the distribution of today's Bitcoin network, the coin printing has dropped by 8.2% in terms of computing power, while its ranking has fallen to seventh.

Bitland protest

Subsequently, Bitland claimed that such acts directly violated the non-compete agreement and asked Pan Zhiyi to return all the compensation paid and a liquidated damage of about 4.6 million yuan.

In addition, Bitcoin’s lawyers also argued at the hearing that the currency was in violation of the contract and that the profit of 26,825 bitcoins earned from mining should also be repaid as a loss to Bitcoin.

"Based on the non-compete agreement, all direct and indirect losses, if difficult to calculate, are calculated by default," one of the lawyers said.

The lawyer argued that “as of February 14th, the total profit of the coin printing was 4% of the 26,825 bitcoin. This is the handling fee charged by the company, multiplied by the price of the bitcoin at that time, RMB 24,518 (about US$3,500) yuan)."

Therefore, with the so-called liquidated damages, the total amount of the appeal will exceed RMB 30 million, which is approximately USD 4.3 million.

Coin counterattack

However, the representative lawyers of the coin-printing founders denied the allegation and told the court that Pan Zhiyi did not fulfill the obligation of the agreement and therefore should not be ordered to pay compensation.

Pan Zhiyi’s lawyer said that Bitumin did not pay the initial compensation to Pan Zhiyi on time according to the agreement. According to the content of the agreement, such as “Party B (Pan Zhixuan) left the company within one month, Party A (Bit mainland) did not pay Party B’s non-compensation compensation. ""

In addition, Pan Zhiyi’s lawyer retorted that the transaction fees received by the currency printing did not necessarily represent the company’s profit, as the company was unable to make a profit as of the hearing. In addition, the lawyer also said that the successful mining of 26,825 bitcoins, does not necessarily mean that BTC.com will cause losses.

The lawyer said:

"There are many mines in the entire network that engage in bitcoin mining. It is not the only two of us. It is not one or the other. Even if the coin printing does not operate Bitcoin mining, it does not of course think that the other party can dig it. It may also be dug by other companies."

Up to now, it is still unclear from the public record whether the court has made a judgment or when it will make a judgment. At the end of the hearing, the judge asked if the parties were willing to reconcile. Bitcoin’s lawyers refused to discuss this in court and suggested that they should stay until the hearing.

Bitland declined to comment on the latest status of the case or provide further clarification. The top of the coin printing did not respond before the deadline for CoinDesk to publish.

It is worth noting that this is not the first time that Bitland has had a legal dispute with a former high-ranking employee.

In 2017, Bitland sued the company's former chip design director, Zuoxing Yang, who, after leaving the company, founded Bitewei, which produces the mining equipment, WhatsMiner, which competes with Bittland. Bittland accused the company of infringing its patent rights.

Bittland originally demanded compensation of RMB 26 billion, or US$ 3.8 billion, but later changed the compensation to USD 380,000. In 2018, after Yang Zuoxing successfully revoked Bitland’s patent on the disputed technology, the Xinjiang court hearing the case dismissed the indictment of Bitian.

Translation: Wu Ziying

Editor: Lin Jiayi

Source: CoinDesk Chinese (WeChat public number)