Bitmain: Explanation of the company’s recent controversial issues

Explanation of the company’s recent controversial issues

Cayman Bit

In early November 2019, under the guidance and confirmation of professional external lawyers, Cayman Bit strictly followed all the steps and procedures necessary for holding a shareholders' meeting in accordance with the company's articles of association and relevant local laws and regulations in the Cayman Islands. Therefore, the resolution made at the shareholders' meeting to abolish the ten-fold voting rights held by Mr. Zhan Ketuan and Mr. Wu Jihan is legal and valid. The Cayman company also registered the relevant matters in the shareholders' meeting resolution accordingly. Mr. Zhan Ketuan's Cayman lawyers also admitted in a document formally submitted to the Cayman Court that they knew that some investor shareholders had indeed received the notice of convening the above-mentioned shareholders' meeting and attached the notice received by such investors as evidence. It is recommended that Mr. Zhan Ketuan reach an agreement with his legal team on the facts before publishing an open letter in disregard of facts and sensationalism. Mr. Wu Jihan will consider pursuing the legal responsibility of those who publish false and defamatory information.

Mr. Wu Jihan and his legal team have always treated the progress of the Cayman lawsuit with a serious and prudent attitude. For example, any documents leaving China cannot carry any information involving state secrets. This is the provision and requirement of the "Law of the People's Republic of China on Guarding State Secrets", "Cybersecurity Law of the People's Republic of China", "Criminal Law of the People's Republic of China" and other laws and regulations. Therefore, before transferring domestic data abroad, Chinese lawyers are required to conduct corresponding security reviews. This is to ensure that it complies with the provisions of Chinese law. All international litigation practices are common. I don't know why Mr. Zhan Ketuan described it as an absurd reason.

Mr. Wu Jihan rarely mentioned the progress of the Cayman lawsuit in the media because he followed the reasonable advice of his lawyers and felt that public opinion should not affect the development of the case and thus affect judicial justice. As we all know, international litigation is a long process. Both parties have their own opinions. Before the court makes a final judgment, no one has the right to bypass the judicial authority and make a rash conclusion.

Hong Kong Bitcoin

From the perspective of Bitmain's structure, Beijing Bit's shareholder is Hong Kong Bit, and Hong Kong Bit's shareholder is Cayman shareholders. It is true that these three companies belong to the same group. However, from the essence of the law, the above three companies are independent legal persons and operate independently. Only when the matters need to be decided by shareholders according to the provisions of their respective articles of association will their shareholders be asked to make relevant resolutions. Therefore, the decision to replace the legal person of Beijing Bit belongs to the resolution that Hong Kong Bit, a shareholder of Beijing Bit, should make, and has no direct relationship with Cayman Bit. The documents required by the industrial and commercial department for industrial and commercial registration also prove this point, that is, only the shareholders' meeting resolution of the direct shareholders is required. If according to Mr. Zhan Ketuan's logic, Hong Kong Bit must represent and convey the will of Cayman Company and its shareholders, then why has Beijing Bit always refused to represent and convey the will of Hong Kong Bit, which is also its shareholder? Law is also a social science that follows strict logic. Using consistent logic to explain problems is a basic respect for the spirit of the rule of law.

In addition, Mr. Zhan Ketuan did convene a shareholders' meeting in December 2019 to try to remove Mr. Wu Jihan from his position as a director, but at that shareholders' meeting, Mr. Zhan Ketuan's proposal did not receive enough votes from the participating shareholders and was therefore not passed. Mr. Wu Jihan is still the chairman of Cayman Bit, and this status is clearly reflected in the Cayman Bit's board of directors.

Beijing Bit

The only shareholder of Beijing Bit is Hong Kong Bit. On October 28, 2019, Hong Kong Bit made a "Shareholder Decision" to appoint Mr. Wu Jihan as the executive director of Beijing Bit and dismiss Mr. Zhan Ketuan from the position of executive director. On November 5, 2019, Mr. Wu Jihan made an "Executive Director Decision" to dismiss Mr. Zhan Ketuan from the position of general manager of Beijing Bit. So far, Mr. Zhan Ketuan no longer holds any position in Beijing Bit. According to Chinese law, choosing the manager of Beijing Bit is one of the basic rights of Hong Kong Bit as a shareholder, and once the shareholder decision is made, it will take legal effect on the company without the need for approval by government agencies or confirmation by judicial authorities. Mr. Zhan Ketuan no longer continues to legally and effectively hold any position in Beijing Bit and has no right to act on behalf of Beijing Bit.

According to the above-mentioned "Shareholder Decision" and "Executive Director Decision", the corresponding company registration and filing information of Beijing Bit has been changed. Mr. Zhan Ketuan applied for administrative reconsideration to revoke the original change registration on the grounds that there were so-called "defects" in the "Shareholder Decision", but the administrative authorities involved did not and had no right to veto the contents of the appointment and removal of Beijing Bit managers in such decisions. In the relevant judicial procedures, no judicial authority made a judgment or ruling to deny the validity of such companies or suspend the execution of such decisions. Therefore, no matter what the current status of the company registration information is, it does not change the fact that Mr. Zhan Ketuan is no longer employed by Beijing Bit and has no right to act on behalf of Beijing Bit.

Mr. Wu Jihan, as the executive director of Beijing Bit legally and effectively appointed by shareholders, enjoys the corresponding management and representative authority of the company in accordance with the law. The current status of Beijing Bit's company registration information that does not conform to the actual situation may mislead good-faith third parties outside the company and pose a threat to the legitimate rights and interests of Beijing Bit and such entities. Beijing Bit is actively promoting the change registration through legal channels to correct it as soon as possible. However, Mr. Zhan Ketuan, knowing that he had been relieved of his original position, used the company registration information status that no longer conformed to the actual situation and continued to act in the name of Beijing Bit's executive director, general manager, and legal representative. These are all acts that undermine Beijing Bit's corporate governance and business management order. Beijing Bit will seriously investigate and recover the responsibilities of him and other relevant entities and the damages caused to Beijing Bit's interests in accordance with the law.

Beijing Bit's official seal has always been properly kept and legally used, and the company has not applied for reporting the loss or re-engraving the official seal. Mr. Zhan Ketuan used the company's registration information status that did not conform to the actual situation, falsely claimed that the company's official seal was "lost", and arbitrarily applied for re-engraving and filing the "official seal" in the name of the company. This is not only invalid in nature, but also an act of infringing the company's legal rights and interests. The company will also investigate this and does not recognize the validity of Mr. Zhan Ketuan's unauthorized use of the "official seal" and the expression of intention and behavior in the name of Beijing Bit.

Original link: https://www.bitmain.com/zh/news-detail/99