Founder of Bitmain Rival MicroBT Arrested for Alleged Embezzlement

Yang Zuoxing, founder and CEO of Shenzhen-based bitcoin miner maker MicroBT, has been arrested for the alleged embezzlement of about $15,000.

The arrest, noted by the Shenzhen Nanshan District Prosecutor on Dec. 12 and reported by business publication Caixin on Sunday, comes amid ongoing battles between mining giant Bitmain and MicroBT, which has been a rising competitor this year challenging Bitmain’s market dominance.

The Shenzhen district prosecutor said on its website last Thursday that it has recently authorized the arrest of a suspect named Yang *Xing (name partially redacted) on the allegation of embezzlement and the criminal case is still ongoing.

Caixin said in the report, citing people familiar with the case, that the person arrested is indeed the founder and CEO of MicroBT, which manufactures the WhatsMiner bitcoin mining equipment with about 40 percent of the market share. The alleged embezzlement amount is 100,000 yuan, or about $15,000, the report said.

The arrest follows media reports early November that Yang had been taken away by local police to assist an investigation over possible IP dispute, though that might not necessarily mean he was arrested at the time.

It also comes at a time when MicroBT is gaining serious market share in the bitcoin miner maker business while Bitmain’s dominance has been waning over 2019. Notably, Yang was taken away by police after Jihan Wu, co-founder if Bitmain regained control of his firm by ousting his rival co-founder and chairman Micree Zhan.

While the prosecutor didn’t specify whether the alleged embezzlement relates to Yang’s own firm or his former employer Bitmain, the report said it followed Bitmain’s move of escalating its failed civil lawsuit against Yang to a criminal case by reporting to police in Beijing with charges against him for trade secrets infringement.

MicroBT and Bitmain declined to comment on the case.

Yang was a former mining chip design director at Beijing-based Bitmain, responsible for developing the mining giant’s flagship AntMiner S7 and S9 models around 2016. Bitmain made $1 billion in profits by selling those models in 2017 and $1 billion in profits in the first half of 2018.

Yang left the firm to start MicroBT after his negotiation with Bitmain co-founders for the firm’s equity fell through. Bitmain brought up a civil case against Yang and MicroBT in 2017, alleging him of infringing a patent Bitmain was granted for bitcoin mining equipment.

In October 2018, Yang’s team successfully appealed to the intellectual property court in China to void Bitmain’s awarded patent and hence the civil case was dismissed.

MicroBT launched its latest WhatsMiner M30 product last week that features a computing power at 88 tera hashes per second.