Bitmain’s Miner Manufacturing Subsidiary Had $680K in Assets Frozen in a Contract Dispute
A district court in Shenzhen, China, recently ordered the freezing of almost $680,000 in assets belonging to a fully owned subsidiary of bitcoin mining giant Bitmain.
In a ruling issued on Sept. 27 and published Friday, the Shenzhen Bao'An District Court sided with a firm called Dongguan Yongjiang Electronics, granting an application for asset protection in a contract dispute with the defendant, Shenzhen Century Cloud Core.
Yongjiang, which supplies electronic device components, asked the court on Sept. 25 to freeze 4.7 million yuan (around $676,000), in assets owned by the
mining subsidiary to ensure it would be able to claim such an amount should the court rule in its favor in an ongoing trade contract dispute.
Century Cloud Core is fully owned by Beijing Bitmain Technologies and is a significant subsidiary of the mining giant, being responsible for manufacturing, carrying out quality assurance and packaging for Bitmain's bitcoin mining equipment, which currently holds a dominant market share.
It's not clear at this stage how long the freeze will be in effect. Based on Chinese laws, freezing of bank accounts and other stores of funds in general should be no longer than six months, while current or liquid assets shouldn't be held in custody for more than a year. Bitmain declined to comment on the case.
This is not the first time that the Shenzhen subsidiary has been caught up in purchasing contract disputes with electronic component providers.
Since January 2019, at least four cases had been filed by different electronic device makers in Shenzhen against Century Cloud Core and Beijing Bitmain Technologies, based on court data compiled by CoinDesk.
Another plaintiff, Shenzhen and Hong Kong-based Youda Electronics, also filed for asset protection in March, leading to the court freezing 5.2 million yuan ($745,000) owned by Bitmain and its subsidiary. That decision was not made public until Nov. 3.
The court cases came at a time when Bitmain was struggling through the
crypto market downturn seen since late last year and major layoffs at the firm in December 2018.
At an internal meeting last month, Jihan Wu, co-founder of Bitmain, admitted to staff that the firm had had suppliers pushing for clearing account payables in December of last year.
Had the overall market not rebounded since April, Bitmain may not have been able to weather the bearish 2018 period, Wu said. The company recently retooled its sales strategy in order to appear more attractive to mining customers ahead of bitcoin's scheduled halving event in May 2020.
So far, apart from the ongoing case with Yongjiang, the rest of the trade disputes filed this year have all been withdrawn by their respective plaintiffs.