Court Denies Bitmain $30M in Damages From Co-Founders of Rival Poolin

A court in China has denied an appeal by bitcoin mining giant Bitmain seeking $30 million in damages from the three co-founders of mining pool rival Poolin.

AccessTimeIconSep 9, 2020 at 8:14 a.m. UTC
Updated Sep 14, 2021 at 9:53 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

A court in China has denied an appeal by bitcoin mining giant Bitmain seeking $30 million in damages from the three co-founders of Poolin, one of the world’s largest cryptocurrency mining pools.

The Beijing No. 1 Intermediate People's Court issued a ruling on the appeal on Aug. 31 and made it public on Sept. 8. The court’s final decision marks the closure of the year-long lawsuit that could have significantly harmed the operations of the rising rival to Bitmain’s pool business.

The court did agree with Beijing-based Bitmain's appeal to increase fines for the Poolin co-founders for violating non-compete agreements they'd made with their former employer, Bitmain's mining pool BTC.com.

As such, Pan Zhibiao, Li Tianzhao and Zhu Fa are required by the court to pay fines of about $200,000, $178,000 and $154,000, respectively.

But the court denied Bitmain's more notable $10 million claims for damages from each of the three, which in Bitmain’s argument, would make up for its losses arising from Poolin’s violation of the non-compete agreements.

The $30 million, which could have made a more material impact on Poolin's business, is an increase from an initial $4.3 million total claim made by Bitmain in April 2019.

In April, the lower-level Beijing Haidian District Court made an initial judgement that the three did violate the agreements by starting Poolin's bitcoin mining pool during the 24-month non-compete period from August 2017.

The lower-level court required Pan, Li and Zhu to pay smaller fines to Bitmain over the violation, but denied Bitmain's $4.3 million damages claim at the time.

The mining giant subsequently filed an appeal seeking larger fines and a hike in the total claim for damages to 210 million yuan, or $30 million, from the three.

Bitmain's lawyers argued in a hearing in August that Poolin made some $30 million in revenue from its bitcoin mining pool fees during the non-compete period.

Given Bitmain's pools accounted for about 30% of the market share during the period, Bitmain claimed an amount proportionate to that revenue should be handed over from the three co-founders.

Poolin's lawyers argued in response that the case brought to trial at a time when the market shares of Bitmain's mining equipment and mining pool operations had both declined.

Therefore, the lawyers said, even if Poolin didn't exist, the revenue may not necessarily go to Bitmain's two pools, BTC.com and Antpool, proportionate to their market share since there are plenty of other players in the field.

The intermediary court said in the latest ruling that Bitmain had failed to provide sufficient evidence that its business losses due to the breaches were higher than the fines and, as such, denied the $30 million claim for damages.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.