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.