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.
December 16, 2019, | AtoZ Markets – According to a court filing released on December 13, the Shenzhen Bao'An District Court ordered to freeze 4.7 million yuan (about $680,000), of Bitmain’s wholly-owned subsidiary, Shenzhen Century Cloud Core.
The ruling follows an application submitted by a manufacturer of electronic components, Dongguan Yongjiang Electronics, on September 24.
Why Chinese court froze the assets of Bitmain’s miner manufacturing subsidiary
Dongguan asked the court to freeze the amount in order to ensure that it would be able to claim it in an ongoing trade contract dispute should the court rule in its favor. Per the filing, Shenzhen Century Cloud Core has the right to appeal the decision.
Century Cloud Core is fully owned by Beijing Bitmain Technologies and is a significant subsidiary of the mining giant. This company is responsible for manufacturing, carrying out quality assurance and packaging for Bitmain's bitcoin mining equipment. Century Cloud Core 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. Nevertheless, current or liquid assets shouldn't be held in custody for more than a year.
Previous allegations of patent infringement
This is not the first time that the Shenzhen subsidiary has been caught up in disputes with electronic component providers.
On November 8, Shenzhen Police seized the founder of Bitcoin mining rig manufacturer MicroBT, Zuoxing Yang. He was arrested over allegations of intellectual property infringement regarding the technology of Beijing-based Bitmain.
Yang previously worked at Bitmain as a processor design director. He also developed the firm’s flagship Antminer S7 and S9 mining rigs. In 2017, Bitmain sued the company over alleged infringement of a patent. Nevertheless, Yang’s lawyers successfully appealed to have the patent revoked in 2018.
Another plaintiff, Shenzhen and Hong Kong-based Youda Electronics, also filed for asset protection in March. This led to the court freezing 5.2 million yuan ($745,000) owned by Bitmain and its subsidiary. That decision was not made public until November 3.
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