A Chinese chip designer who helped Bitmain Technologies (比特大陸) become the world’s largest maker of bitcoin mining rigs before starting his own company has been arrested, three people familiar with the matter said.
Yang Zuoxing (楊作興), who had worked for Bitmain until June 2016, was detained by police in Shenzhen at the end of October in relation to a legal dispute with his former employer, said the people, who asked not to be identified discussing legal matters.
Prosecutors in Shenzhen, China, on Thursday last week said in a statement that Yang had been arrested on suspicion of embezzlement and that legal procedures were ongoing.
The statement omitted the second of three Chinese characters that make up Yang’s full name, likely to shield his identity.
It did not mention Bitmain or MicroBT (比特微), the cryptomining company Yang founded a month after quitting Bitmain.
MicroBT has grown into a serious contender, clawing market share away from Bitmain with its Whatsminer equipment.
While cryptominer makers produce machines with similar specifications and prices, they compete against each other for tight chip supplies from foundries operated by Taiwan Semiconductor Manufacturing Co (台積電) and Samsung Electronics Co.
The arrest of Yang comes as competition between Bitmain and its rivals intensifies.
While MicroBT’s flagship Whatsminer 20 series are the best-selling bitcoin mining rigs so far this year, Yang’s absence has halted his company’s ability to make key decisions, including on pricing, two of the people said.
Representatives of MicroBT and Bitmain declined to comment. The prosecutors’ office did not respond immediately to a request for comment.
Bitmain has waged several legal battles against prominent former exployees.
The Beijing-based company last year lost a court ruling against MicroBT over allegations that Yang’s start-up infringed its patent rights.
Earlier this year, Bitmain filed a lawsuit against three former employees who started rival mining pool Poolin (幣印礦池) for allegedly contravening a non-competition agreement.
An internal power struggle within Bitmain has seen billionaire Wu Jihan (吳忌寒) kick cofounder Micree Zhan (詹克團) out of the company and it has been trying to tout new sales initiatives to lure customers.
Yang previously told Bloomberg News that he helped Bitmain design its highly sought-after machines, but he left the company after Wu and Zhan turned down his request for a stake in the business.
Yang, the majority shareholder of MicroBT, graduated from Beijing’s Tsinghua University with a doctorate in mechatronics before entering the chip-design industry.
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