The "Wu-Zhan War" between Bitmain and James Bond re-emerges

The power struggle at Bitmain is not over yet. Former director Zhan Ketuan, who was expelled from the senior management last year, has made a series of moves to try to regain control of the company. Reclaiming the position of legal representative of the company is a key step in his plan.

According to Bitmain’s official statement on April 29, the administrative reconsideration that Zhan Ketuan had previously applied for to the Haidian District Justice Bureau of Beijing has come to a conclusion - the decision made by the Haidian District Market Supervision Bureau on January 2 this year to approve the change of registration of the legal representative of Beijing Bitmain Technology Co., Ltd. (hereinafter referred to as "Beijing Bit") was revoked.

Bitmain expressed doubts about the results of the administrative review, believing that the above review resolution is an administrative means to interfere with the company's internal autonomy and violates the relevant provisions of the "Company Law". They will file an administrative lawsuit for this.

A lawyer familiar with the relevant laws told Fengchao Finance that the company's articles of association do have priority in determining the legal representative. However, to determine whether the relevant reconsideration decision made by the Haidian District Justice Bureau is illegal, it is necessary to clarify the reasons for Zhan Ketuan's application for reconsideration. At present, this information is not clear.

Although Zhan Ketuan used the administrative reconsideration procedure to seize power, the actual result is still full of uncertainty. Bitmain emphasized that the above administrative reconsideration results did not decide to restore Zhan Ketuan as the legal representative. Industrial and commercial information shows that at present, the legal representative of Beijing Bit is still Liu Luyao.

In addition, Bitmain Technologies Limited, the Hong Kong entity that wholly owns Beijing Bitmain, still has the right to exclude Zhan Ketuan. Bitmain said that the executive director and authorized representative of Hong Kong Bitmain is Wu Jihan alone; the shareholder of Hong Kong Bitmain is a Cayman company, which no longer has super voting rights. "All shareholders have one share, one vote, and vote fairly, and Zhan Ketuan has been removed from the board of directors of the Cayman company."

It seems that Bitmain, led by Wu Jihan, has already blocked Zhan Ketuan’s power grab through the company’s articles of association. According to data from Bitmain, the company’s revenue in the first four months exceeded 300 million US dollars, and its AI business has achieved rapid growth. The changes brought about by Wu Jihan after he regained control of “Bitmain” are winning him support from all sides.

Bitmain fights back against administrative review

On April 29, a public statement by chip giant Bitmain attracted outside attention. After the company's former chairman Zhan Ketuan was dismissed from all positions last year, this power struggle caused by internal fighting has come to a head.

Bitmain disclosed that on April 28, the Haidian District Justice Bureau of Beijing made a reconsideration decision to "revoke the Haidian District Market Supervision Bureau's previous approval of the change of registration of the legal representative of Beijing Bit."

In October last year, after Zhan Ketuan was expelled from Bitmain's management, the legal representative of Beijing Bit was changed from Zhan Ketuan to Wu Jihan. On January 2 this year, Beijing Bit changed its legal representative again, from Executive Director Wu Jihan to General Manager Liu Luyao. Bitmain said the reason for the change was to further improve internal management efficiency.

Since then, Zhan Ketuan has been trying to regain power through legal means, and the lawsuits have spread all the way from Beijing and Fujian to the Cayman Islands.

Bitmain’s April 29 statement revealed that on February 12 this year, Zhan Ketuan filed an administrative reconsideration with the Haidian District Justice Bureau, applying to revoke the change of legal representative and restore himself as legal representative. On April 28, the change was revoked, but Bitmain emphasized that Zhan Ketuan was not restored as legal representative.

On May 2, Fengchao Finance checked the National Enterprise Credit Information Publicity System and found that Liu Luyao is still the legal representative of Beijing Bit.

As of May 2, the legal representative of Beijing Bit is still Liu Luyao.

Although Zhan Ketuan did not regain the position of legal representative of Beijing Bitmain as he wished, some media believe that the relevant decision of the Haidian District Justice Bureau is a major victory for Zhan to regain control of Bitmain. "This victory makes Zhan's return to Bitmain a possibility that cannot be ignored."

In Bitmain's view, the selection of legal persons is very important to the survival and development of the company. According to the relevant provisions of the Company Law, shareholders have the right to replace legal persons. "It should be emphasized that the final right to appoint and remove legal persons of Bitmain belongs to shareholders, not any administrative agency or individual."

Therefore, Bitmain questioned the results of the administrative review, believing that the Haidian District Justice Bureau used administrative power to "grossly interfere with corporate autonomy" and that the company would file an administrative lawsuit.

A lawyer familiar with relevant laws told Fengchao Finance that according to Article 13 of my country's Company Law, the legal representative of a company shall be the chairman, executive director or manager in accordance with the provisions of the company's articles of association and shall be registered in accordance with the law. "The articles of association have priority in determining the legal representative."

Regarding whether the Haidian District Justice Bureau violated the law, the above-mentioned lawyer said that according to Article 28 of my country's Administrative Reconsideration Law, the judgment needs to see whether the main facts are unclear, the evidence is insufficient, the applicable basis is wrong, and the statutory procedures are violated. "Because the reasons for Zhan Ketuan's application for reconsideration are not very clear, it is not certain whether the application meets the acceptance conditions, and therefore it is not yet certain whether the relevant reconsideration decision made by the Haidian District Justice Bureau is illegal."

Beijing's Bitcoin dispute still depends on voting rights

This is not the first time that Zhan Ketuan has tried to seize power through legal means. Last October, Wu Jihan replaced Zhan Ketuan as the legal representative of Beijing Bit and dismissed him from all his positions in the company. Afterwards, Zhan Ketuan filed an administrative lawsuit with the Haidian District People's Court because he was dissatisfied with the industrial and commercial registration change decision made by the Haidian District Market Supervision Administration. According to the public announcement of the Beijing Court Trial Information Network, Zhan Ketuan filed for withdrawal of the lawsuit on November 14 last year. Before withdrawing the lawsuit, Zhan applied for administrative reconsideration.

According to the current industrial and commercial information, the legal representative of Beijing Bit has not been changed. Judging from the right of enterprises to set up their own articles of association granted by the Company Law, if Zhan wants to return to the peak of power, he still needs equity advantage.

According to Qichacha information, Beijing Bit is a wholly-owned subsidiary of Bitmain Technologies Limited (hereinafter referred to as "Hong Kong Bit"), the Hong Kong entity of Bitmain. In other words, the only shareholder of Beijing Bit is Hong Kong Bit.

Qichacha shows that Hong Kong Bit wholly owns Beijing Bit

Bitmain emphasized in its statement that the executive director and authorized representative of Hong Kong Bit are both Wu Jihan, and the shareholder of Hong Kong Bit is a Cayman company, which no longer has a 10x super voting right setting. "All shareholders have one share, one vote, and vote fairly, and Zhan Ketuan has been removed from the board of directors of the Cayman company."

Previously, when Bitmain was planning to go public in Hong Kong, it was disclosed that Zhan Ketuan had 59.6% of the voting rights. But in November last year, after the start of the "Zhan Wu fight", Bitmain held a shareholders' meeting and cancelled Zhan Ketuan's voting rights. This also led to Zhan filing a lawsuit in Cayman to get back his voting rights.

According to people close to Bitmain, Zhan only indirectly holds 36% of Bitmain's shares, while five shareholders including Wu Jihan have formed a unified camp and own more than 50% of the shares.

Whether in terms of shareholding ratio or voting rights, Zhan Ketuan obviously does not have an advantage. This may be the reason why Bitmain dared to say in its statement that "even if Zhan Ketuan was wrongly registered as the legal representative of Beijing Bitmain, Hong Kong Bitmain can remove him again according to law." It can be seen that Bitmain, with Wu Jihan back at the helm, has already reduced the possibility of Zhan Ketuan's return at the level of the company's articles of association.

AI business landed after Zhan Ketuan left

Beijing Bit is just one of Bitmain's dozens of subsidiaries at home and abroad. Bitmain said that even if Zhan Ketuan was wrongly registered as the legal representative of Beijing Bit, it would not have a significant impact on Bitmain's normal operations at home and abroad.

Not long ago, Bitmain announced that its revenue in the first four months of 2020 exceeded US$300 million, and its mining farm layout has been further expanded. Currently, four mining farms are under construction or renovation. In addition, the AI ​​business is also growing rapidly.

Compared with the historical loss of US$310 million in the first quarter of last year, Bitmain is recovering.

It is worth noting that the AI ​​business is the field previously led by Zhan Ketuan. According to media reports, after the structural adjustment of Bitmain's AI business, the third-generation cloud AI chip BM1684 has begun mass production and shipment, achieved breakthroughs in multiple major customers, and received the final payment of orders worth tens of millions. The fourth-generation cloud AI chip BM1686 is also being upgraded. The third-generation cloud AI chip BM1684 was developed by Zhan Ketuan, and a press conference was held for the product on September 17 last year.

Last year, Bitmain released the BM1684 chip

The "structural adjustment of AI business" period began at the beginning of this year. After Wu Jihan returned to Bitmain, he made personnel adjustments. At that time, the AI ​​department was the main department for adjustment. Planet Daily reported that the adjustment ratio was about 1/3, among which the AI ​​business line had the highest adjustment ratio, up to 2/3. Previously, the resigned employees revealed to Fengchao Finance that because the company's compensation was relatively reasonable, many people did not object to "taking the money and leaving." But public opinion believes that without Zhan Ketuan, the AI ​​business will be "cool."

Now, Bitmain has released a signal of growth in its AI business from within, which seems to be a statement to the outside world that even if the AI ​​department is no longer led by Zhan Ketuan after the layoffs, it will not affect the company's AI business development. It is reported that in addition to publishing operating data internally, Bitmain also issued a bonus of up to 70,000 yuan per person to employees.

If the operating data points to shareholders and the high bonuses are for employees, then Wu Jihan, who has returned to the "mainland", is gaining support from many parties, which also makes Zhan Ketuan, who has taken up legal weapons, a little passive.

Now, Bitmain has planned to file a lawsuit against the administrative review results, and this "game of power" will continue.

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