Exclusive disclosure of the ins and outs of Zhan Ketuan's "Beijing Counterattack" and the deep involvement of administrative forces

Wu Blockchain learned that on the evening of April 29, Bitmain held an internal meeting and issued an internal letter and a public statement, saying:

Since Zhan Ketuan was dismissed, all employees of the company have been working hard to fill the financial black hole left by Zhan Ketuan, but Zhan Ketuan ignored the common interests of the company and all shareholders and employees as well as the efforts to save the company, and repeatedly filed administrative reconsideration and other lawsuits.

On April 28, 2020, the Beijing Haidian District Justice Bureau made a reconsideration decision to revoke the Beijing Haidian District Market Supervision Bureau's decision made on January 2, 2020 to approve the change of registration of the legal representative of Beijing Bit, but did not decide to restore Zhan Ketuan as the legal representative.

Original text: Bitmain’s statement , but because the matter is too complicated, Wu said blockchain will help you explain it in detail. In fact, the statement simply means: Bitmain previously changed the legal person of Beijing Bit, but Zhan Ketuan revoked it through administrative reconsideration. The mainland believes that it is unreasonable, and the two sides will continue to sue each other.

It all started at the end of October 2019.

On October 28, the legal representative and executive director of Beijing Bitmain Technology Co., Ltd., the Beijing operating entity of Bitmain, were changed from Zhan Ketuan to Wu Jihan. On October 29, Wu Jihan issued an internal letter to relieve Zhan Ketuan of all his duties in Bitmain.

Subsequently, Zhan Ketuan quickly hired Han Kun Law Firm. He first filed an administrative lawsuit with the Haidian District People's Court of Beijing because he was dissatisfied with the industrial and commercial registration change made by the Beijing Haidian District Market Supervision Administration. During the litigation process, Zhan Ketuan filed to withdraw the lawsuit on November 14, 2019.

At the same time, Zhan Ketuan initiated the first administrative review, requesting the cancellation of Beijing Bit’s change of legal representative and executive director. On January 31, the Beijing Haidian District Justice Bureau issued an “Administrative Review Decision” agreeing to revoke it.

It is said that the reason for the cancellation is rather "ridiculous" because the Judicial Bureau believes that Bitmain's application materials were "altered", and this alteration was caused by the modification of the industrial and commercial standard template. Bitmain and Wu Jihan were dissatisfied with the first reconsideration decision and filed an administrative lawsuit with the Beijing Fourth Intermediate People's Court. The case is currently under trial.

But why did Zhan Ketuan file for a second administrative review?

Because on January 2, Bitmain changed its legal representative again, with Liu Luyao, the company's chief financial officer, replacing Wu Jihan. The reason is simple: Bitmain is controlled by Cayman Islands and Hong Kong controls more than a dozen subsidiaries around the world, including Beijing Bitmain. Therefore, Bitmain can theoretically change its legal representative at any time.

This change disrupted Zhan Ketuan's plan and made it impossible for him to return to the legal person. Therefore, he filed a second administrative review.

On February 12, 2020, Zhan Ketuan requested the Beijing Haidian District Market Supervision Bureau to revoke the second legal representative change registration on January 2, and to restore the registration of Beijing Bit's legal representative to Zhan Ketuan. For similar reasons, the Beijing Haidian District Justice Bureau once again supported Zhan Ketuan's request to revoke the administrative reconsideration, but did not support Zhan Ketuan's request to restore him as the legal representative.

Bitmain naturally disagrees, and the core reasons are as follows:

1: Zhan Ketuan had already filed an administrative lawsuit and closed the case before applying for administrative reconsideration. Article 16 of the Administrative Reconsideration Law of the People's Republic of China stipulates: "If a citizen, legal person or other organization files an administrative lawsuit with a people's court and the people's court has accepted it in accordance with the law, it shall not apply for administrative reconsideration."

2: In the two legal representative change registrations, Beijing Bitmain made pre-applications in the unified "registration system" of the Beijing Municipal Market Supervision Bureau, and prepared paper application materials based on the relevant documents and templates generated by the system. In other words, the alteration of the materials was also due to the modification of the industrial and commercial standard template, and Bitmain became the "sucker".

3: The appointment and removal of Bitmain’s legal representatives is decided by Cayman shareholders, not administrative agencies. In terms of shareholder distribution, Wu Jihan already holds more than 51% of the shares.

Zhan Ketuan had 59.6% of the voting rights when Bitmain was listed in Hong Kong. However, Bitmain cancelled this voting right at its shareholders' meeting in November. Zhan Ketuan is suing in Cayman to try to get back his voting rights.

After understanding the full background, Wu said that the Beijing Haidian government should not use administrative power to influence this matter. As Bitmain stated in its statement, "it is a crude interference in the company's internal autonomy through administrative means" for three reasons:

First, before the Cayman Islands made its ruling, Beijing Bit was a subsidiary, and the legal person change was legally normal. Due to poor communication within the government, if there were deviations in the application materials, for example, the government could have adopted methods such as resubmitting the correct materials instead of directly rejecting the legal changes and causing a negative impression that the administration had an impact on the company.

Second, Bitmain just announced its results, showing that its revenue from January to April exceeded 300 million US dollars, and its AI business is developing rapidly. In contrast, its market share fell rapidly in 2019 under the leadership of Zhan Ketuan. The results prove that Bitmain employees and investors are more supportive of Wu Jihan.

Third, judging from the judgment in Fuzhou, Beijing cannot rule out the possibility of related operations. However, if administrative power is used to interfere with the normal operation of the company, Wu Jihan can easily move the company away. The governments of Chongqing, Chengdu, Wuhan and other places have expressed their high welcome and will give more preferential policies than Beijing (in fact, the mainland has already set up a new company in Chongqing).

How important is Bitmain to Beijing? Beijing's integrated circuit industry once surpassed Shanghai and ranked second in the country because of Bitmain. Beijing's administrative decisions affect the normal development of enterprises and lead to the loss of leading enterprises, which is not worth the loss in the end.