Court Orders Poolin Founders to Repay Compensation and Face $1.2M Fine to Bitmain

This case kicked off back in August 2018 when Bitmain took legal action against three ex-execs who launched a competing mining pool, accusing them of breaching their non-compete agreement. The court found that these three ex-execs indeed broke the non-compete terms and now have to pay up to their old employer. The decision highlighted that Pan Zhibiao, who’s the legal face of Poolin, along with shareholders Zhu Fa and Li Tianzhao, were ordered to enforce the non-compete and return all compensation they received (which adds up to more than $170,000 in fines).

And I though Micree Zhan is the only person having troubles with Bitmain and now I am seeing that they also have non-compete issues against their former employees. Honestly I don't have any issues regarding this, even if it looks dirty and all if their bylaws and contracts state a non-compete clause and NDA agreements they will most likely fail if their business will ever come close to what Bitmain is offering. What I didn't like about the court's decision is even their compensation for the two years their work for Bitmain will be given back to them which honestly is unfair for them. Regarding about Micree Zhan I guess that his legal action isn't over yet with Bitmain and there are still news surfacing about it. With all this noise happening in the courtroom it would be less and less likely for the company to be listed in the NYSE.

Almost forgot about this. I generally think China does try to be fair in business law, but I suppose the legal text is unambiguous when it comes to NDA and non-compete clauses, so am really surprised these guys went that direction without getting the clear from Bitmain. I mean, plenty of employees set off on their own after gaining the skills and know-how, and in my experience, most former employers don't mind -- as long as boundaries are set and it's all done in good faith. I agree with Theb that the employment compensation being returned is a bit unfair, the fines ought to have been enough. I suppose they're trying to set an example here.

Does anyone know why Micree Zhan was fired in the first place? All I can see from news articles is that Jihan Wu fired him without telling him first.

First of all Micree Zhan is not "fired" but ousted from his position in the board, even if he was removed from the board he still has shares of Bitmain that's why he can still pursue legal action against the company of his own. After all Zhan himself has 36% shares of Bitmain as compared to Wu who only has 20% but the thing is Wu might have allies himself to other members of the board that's why he have greater voting power in this decision. Also Zhan being clueless with his ousting is also one of the strategies of any board takeover to surprise the current seating chairman.

That's probably because it doesn't threaten employers' business under most circumstances. In this case though, these employees had money to burn, and their current stature proves that they are at least a significant competitor in Bitmain's business. Bitmain exercised their right, which they definitely didn't need to do, but the court agreed anyway. The Zhan mess is certainly ugly, but I don't think this case will affect Bitmain's public perception very much. There was an agreement and it was broken, so it's understandable that they went to court. Either way though, I don't think they have much of a chance considering they weren't even able to breach HK.

That makes complete sense! Such kind of non-competition agreements are usually put in place to safeguard the business. Let's assume, I start a company in a certain sector today and hired three employees. These employees worked for me for a year to understand how the business work and receive their salaries during that period. Now after a year, they resign and started challenging the existence of my own business. That's not done!  Long back, I used to work for a freight forwarding company who were just starting up with their own platform for freight forwarders. They have built a unique platform to integrate freight forwarding as well as trucking industry in a single go. I had a similar kind of agreement executed with the while joining the company which stated I can't join a freight forwarding business for another 3 years after leaving their company. The Judge has taken right decision to safeguard the intellectual integrity of a business!

However what bugs me is why these ex-employees continue to create their own mining pool if they have an existing non-compete clause with Bitmain. Bitmain might did  a dirty trick by hiding the clause itself under their contract rather than outright telling that a non-compete clause such exist. Non-competes and NDAs(Non-disclosure Agreements) clauses are supposed to be said vocally and is clearly seen in their contracts so that they are fully aware of their contract. These three executives might not even have a clue that's why they got trapped by Bitmain. I have a feeling that this is a possibility here since they did this kind of dirty tactic to Micree when he got ousted.