Former Bitmain Chairman Zhan Ketuan ordered to report to the police to investigate Yang Zuoxing of Shenma Mining Machine

Author: Bai Jie

On November 8, news broke that Yang Zuoxing, the founder of Shenma Mining Machine, was taken away by the police for investigation.

According to Wu Blockchain, people close to Zhan Ketuan revealed that the reason was related to the infringement of Bitmain’s trade secrets. The report led to Yang Zuoxing being investigated, and it was a direct order from the former chairman of Bitmain, Zhan Ketuan, before he was dismissed.

Yang Zuoxing was a former Bitmain employee who left Bitmain due to share distribution issues and later founded Shenma Mining. Wu Jihan originally wanted to grant Yang Zuoxing 2% of the shares in exchange for staying, but was rejected by Zhan Ketuan.

Afterwards, Zhan Ketuan continued to launch attacks on Shenma Mining Machine: including requiring the packaging and testing factory not to serve Shenma; civil lawsuit against Yang Zuoxing for infringement; and even causing Yang Zuoxing to be taken away for investigation on the grounds of infringing on trade secrets.

Among the employees of Bitmain, mining circles, and exchanges who have had interactions with Yang Zuoxing, Yang is generally viewed favorably, and is considered a nice and loyal person.

But some people also say that Shenma's technological leap is just a copy of Bitmain. Bitmain had poor security in the early years. It is rumored that Yang Zuoxing took away all the S9 codes after leaving the company, and even leaked the codes to other mining machine manufacturers, causing other manufacturers to quickly catch up with Bitmain's mining machine chip technology.

In this regard, the author consulted several relevant persons in charge of Shenma Mining Machine, but received no response.

1 Yang Zuoxing was suddenly investigated

At 5 pm on November 8, news that Shemma Mining Machine boss Yang Zuoxing was taken away by the police for investigation suddenly spread in the currency circle. The source was the circle of friends of a certain exchange staff member, and then it was circulated wildly in major WeChat groups.

Wu said that the blockchain correspondent took photos of the Shenma Mining Machine office tonight and asked the employees, but the employees remained silent and seemed unaware of the matter.

2 Mining machine sales are overshadowed

It was revealed that Yang Zuoxing was investigated because Bitmain reported him to the police for violating trade secrets. It is not known where the police took this action, nor is it known when he was taken away, but it is certain that it was in the past few weeks and that it will be a public prosecution case handled by the procuratorate in the future.

Yang Zuoxing graduated from Tsinghua University and joined Bitmain as a chip engineer in March 2015. He once told the media that he helped Bitmain build the world's monopoly S9 mining machine with his part-time job. Industry rumors said that Wu Jihan tried to keep Yang Zuoxing with 2% of the company's shares, but Zhan Ketuan only agreed to give 0.5%. In the end, Yang Zuoxing left and founded Shenma Mining Machine.

(As an aside, many people confirmed to the author that Yang Zuoxing complained many times that he, as a technical core, could not match the shares of assistant Zhan)

A former Bitmain R&D staff member told Lao Wu that it was rumored that when Yang Zuoxing left, he took away the full set of S9 codes and shared the core technology with other players in the industry in some form. At the same time, due to Bitmain's continuous tape-out failures, in 2018, Bitmain's technology level was overtaken by players such as Innosilicon and Shenma, and its market share shrank.

After Bitmain monopolized TSMC's production capacity, the success of Shenma Miner was largely due to its ties with the wafer foundry Samsung. However, due to the Japan-South Korea trade war, Samsung's supply of certain technical raw materials was cut off, resulting in Shenma Miner's failure to deliver on time this year.

Yang Zuoxing once said that the capacity problem would not be alleviated until late October, but it has not been alleviated yet. Yang Zuoxing's sudden investigation also cast a shadow on the miners who bought Shenma mining machines.

Some lawyers even took the initiative to tell reporters that if the infringement of Shenma mining machine is confirmed and the infringed party intends to investigate, customers who purchase the infringing products will also bear certain legal responsibilities.

3 What Zhan Ketuan did before leaving office

According to people close to Zhan Ketuan, the criminal report against Yang Zuoxing was made under the order of Zhan Ketuan and was an action that began before Wu Jihan seized power. It was not another ruthless move by Wu Jihan after he seized power as speculated by the outside world.

Zhan Ketuan was a suspicious and vengeful person, and Yang Zuoxing had always been his "greatest grudge", and he used various means to restrict him.

Zhan Ketuan mainly started from the industrial chain and legal affairs. In the industrial chain, Zhan Ketuan once asked major packaging and testing factories not to package and test Shenma; in civil litigation, Bitmain continued to sue Shenma, but it was dismissed in September 2018; in criminal litigation, Zhan Ketuan asked Bitmain to report the infringement of trade secrets, and now Yang Zuoxing has been taken away for investigation.

In contrast, Yang Zuoxing is good at using the media. Guo Chunlong, a classmate and former colleague of Yang Zuoxing, once wrote an article titled "Can Bitmain IPO escape from the technical dilemma?", which disclosed a lot of internal information of Bitmain and even led to Zhan Ketuan launching a "catch the ghost" operation. The article was also forwarded on hundreds of small media through a public relations company. Later, Yang Zuoxing reported through various media, including Bloomberg, to portray himself as the first challenger of Bitmain. However, Yang took all the credit for S9, which caused dissatisfaction among the R&D staff at that time.

Attached legal provisions:

According to Article 219 of the Criminal Law, anyone who commits any of the following acts of infringing on trade secrets and causes serious losses to the rights holder of the trade secrets shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall be fined or fined alone; if the consequences are particularly serious, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall be fined:

(1) obtaining the business secrets of the right holder by theft, inducement, coercion or other improper means;

(2) disclosing, using or allowing others to use the business secrets of the right holder obtained by the means mentioned in the preceding paragraph;

(3) Violating the agreement or the right holder's requirement to keep the trade secrets confidential by disclosing, using or allowing others to use the trade secrets in their possession.

——————This is a dividing line

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