Bitmain’s subsidiary gets $680,000 in assets frozen by court order

According to the recent ruling by Shenzhen’s district court, almost $680,000 in assets belonging to Bitmain’s subsidiary is now frozen. The ruling favored another company called Dongguan Yongjiang Electronics, which was granted an application for asset protection in a contract dispute with a mentioned subsidiary of mining gear giant Bitmain — Shenzhen Century Cloud Core.

Century Cloud Core is a major subsidiary of Bitmain, and it is charged with manufacturing of mining products, as well as with carrying out packaging and quality assurance.

Meanwhile, Yongjiang is an electronic device supplier, which requested that the court freezes Century Cloud Core’s 4.7 million yuan ($676,000) in assets. The request was submitted on September 25th, in order to ensure that this amount could be claimed if the court rules in Yongjiang’s favor.

For now, it remains unclear for how long will the assets remain frozen. However, according to China’s laws, the funds can only be frozen for six months, or shorter.

The number of cases against Bitmain’s subsidiary surges in 2019

One thing to note is that this is not the first time that the Shenzhen subsidiary got caught up in a contract dispute with providers of electronic components. There were at least four other cases in 2019 alone.

Youda Electronics is another plaintiff who filed for asset protection in a case dating back to March 2019. Back then, the court froze $745,000 (5.2 million yuan) owned by Bitmain’s subsidiary, although the decision only became public in early November of this year.

This and other court cases were targeting Bitmain and its subsidiary back when the company struggled with the crypto market’s price drop. Further, the company also had a lot of layoffs a year ago, in December 2018.

Last month, the company held an internal meeting where its CEO, Jihan Wu, revealed that the firm had its suppliers push for clearing account payables during the time of the layoffs. This led many to question what would have happened to Bitmain if crypto prices did not skyrocket between April and June 2019.

Wu admitted that the crypto winter of 2018 likely would have had very bad consequences if this had not happened. Since then, the company retooled its sales strategy, hoping that mining customers might see it as more attractive. This is especially important due to Bitcoin’s pending block reward halving, scheduled for May 2020.

At this point, Yongjiang’s trade dispute filing is the only one that remains, while all others were withdrawn at some point during 2019.