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Polychain, Bitmain Back $10.7 Million SAFT for Encryption Startup NuCypher



NuCypher, an encryption startup, has raised $10.7 million in a simple agreement for future tokens (SAFT) led by Polychain Capital. Marking the occasion, the company launched its public testnet.

NuCypher’s particular product is based on proxy re-encryption, which allows files to be encrypted to lots of people and for administrators to grant and revoke access based on certain conditions. The company dates back to 2015, but it began looking at tokens as a way to decentralize its infrastructure in 2017.

CoinDesk covered NuCypher as one of the buzzy initial coin offerings (ICOs) of 2017, but the company ultimately opted not to pursue a public token sale. Instead, it ran one SAFT for $4.4 million in 2017.

In an email to CoinDesk, NuCyhper co-founder and CEO MacLane Wilkison said the new SAFT comes as the company nears mainnet launch:

“The launch of our public testnet is the culmination of over two years of hard work to bring data privacy to dApps built on Ethereum and other public blockchains. The network is now fully implemented and ready to enter its final stress testing phase.”

Other participants in the round include Bitmain, Bitfury, Y Combinator Continuity Fund, Compound VC, Notation Capital, DHVC, Hashed, Arrington XRP Capital and CoinFund.

This round of investors has agreed to lock their tokens for the purpose of staking nodes that will run the NuCypher software. The protocol decentralizes by allowing nodes to earn tokens by making encryption computations. The investors will lose their stakes, however, if they are found to be acting maliciously.

Participants in the newest SAFT purchased 8 percent of the initial token supply of 1 billion ERC-20 tokens, with 31 percent having been sold in the prior $4.4 million round. Node operators will be paid in a combination of new token emissions and network fees. Like many other networks, inflation will diminish over time as fees increase with usage.

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In order to further decentralize the network, NuCyhper announced a distribution method called a WorkLock. The precise terms have not yet been released but the mechanics have been described in a Medium post.

In short, new users can put ETH into a smart contract and they will receive NuCypher tokens. Their ETH will be burned, however, unless they use the NuCypher tokens to stake a node for a certain amount of time.

This should discourage people from claiming NuCypher tokens unless they intend to be users. Somewhere between 25o–400 million tokens will be designated for distribution through the WorkLock.

While participating requires technical skills, NuCypher has tried to facilitate it as much as possible. It has already released staking documentation. Many well-known staking operators such as Bison Trails, Grassfed Networks and Staked (among others) are already running NuCypher.

To foster app building, NuCyhper ran a hackathon with CoinList and several minimum viable products are live now, including Stridon, for paid blogging; Snowden, for posting on social media so your friends can read it and the platform can’t; and NuBox, for encrypted file storage.

NuCypher team deploying testnet image courtesy of the company



Founder of Bitmain Rival Held by Police Over Possible IP Dispute



Zuoxing Yang, founder and CEO of Shenzhen-based bitcoin miner maker MicroBT, is being held by local police to assist an investigation, CoinDesk has learned.

The investigation is likely over allegations of intellectual property infringement by the firm related to the technology of its rival Beijing-based crypto mining giant Bitmain, according to one source close to MicroBT with knowledge of the matter. The news was first reported by Chinese crypto news source BlockBeats.

The source confirmed to CoinDesk that Yang was taken away by local police at the end of October – after the unexpected return to Bitmain of of Jihan Wu, co-founder of the firm. Wu seized control of Bitmain last week by ousting the company’s other co-founder and the then-chairman Micree Zhan.

Yang was formerly processor design director at Bitmain, responsible for developing the firm’s flagship AntMiner S7 and S9 models around 2016. However, he left the company and raised over $20 million to found MicroBT – which produces the WhatsMiner range of mining devices – after discussions with Zhan and Wu for stock options fell through.

Bitmain has already sued Yang and his company in 2017 over alleged infringement of a patent that Bitmain was granted for bitcoin miner-related technology. In 2018, Yang’s legal team successfully appealed to a court in China to have the patent revoked, after which the case was dismissed.

The source said that at this point it’s not clear how and why a police investigation has been opened over possible intellectual property infringement.

MicroBT has recently been posing increased competition to top miner manufacturers such as Bitmain and Canaan, having grown its market share in the bitcoin mining industry.

The firm had not responded to a CoinDesk request for comment at press time. Bitmain did not wish to comment when asked.


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Micree Zhan Says He’ll Take Legal Action to Return to Bitmain



Bitcoin mining giant Bitmain’s co-founder Micree Zhan, who was abruptly ousted from the company last week, said he’s going to take legal action to secure his return to the firm.

In a letter posted on his WeChat feed Wednesday, Zhan publicly addressed what he described as a coup without consent for the first time. Last week, fellow co-founder Jihan Wu told all Bitmain staff in a surprising email that Zhan had been dismissed from all of his roles, and forbade employees from engaging with him.

Wu further revealed an ugly power struggle between him and Zhan during Bitmain’s all-hands meeting on Tuesday last week following the initial email to the staff. Zhan did not immediately issue any statement or respond to requests for comment from multiple media outlets, including CoinDesk.

But in Wednesday’s statement, Zhan said he was ousted from the company without any consent or prior knowledge, and he plans to resolve the issue through legal methods. He will take Bitmain on in court if needed.

“I have never thought that as a person focusing on technology and product, I have to start thinking from legal perspectives. It was embarrassing that as a Bitmain co-founder, the biggest shareholder, and a registered legal representative, I got ousted without any knowledge in this coup while on a business trip,” he wrote, adding:

“I didn’t realize until then that those scenes in TV shows, where you get stabbed on your back by those partners you trusted and ‘brothers’ you fought together with, can really happen in real life.”

While the letter did not state whom it’s specifically addressing, Zhan told Bitmain staffers and shareholders to be assured that he will “return to the company as soon as possible through legal methods to end this very critical moment.”

“Bitmain is our child. I will fight for her till the end with legal weapons. I won’t allow those who want to plot against Bitmain to succeed. If someone wants a war, we will give them one,” he said.

He further added he envisions Bitmain reaching the goal of dominating 90 percent of the bitcoin mining equipment market while expanding its AI business.


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Bitmain Turmoil: Co-Founder and Executive Director Micree Zhan Ouste



In a surprising move, Beijing-based bitcoin mining giant Bitmain has ousted co-founder and executive director Micree Ketuan Zhan, according to an internal email sent to staff.

Jihan Wu, another co-founder of Bitmain and now chairman of the board, sent an email with a subject “important notice” to all staff around Tuesday noon Beijing time, saying:

“Bitmain’s co-founder, chairman, legal representative and executive director Jihan Wu has decided to dismiss all roles of Ketuan Zhan, effective immediately. Any Bitmain staff shall no longer take any direction from Zhan, or participate in any meeting organized by Zhan. Bitmain may, based on the situation, consider terminating employment contracts of those who violate this note.”

One Bitmain staffer confirmed to CoinDesk under anonymity the authenticity of the internal email that CoinDesk obtained, and said it is like the version 2.0 of Dec 17, referring to Bitmain’s major layoff in late 2018. Another source close to the company said Bitmain is currently having an urgent all-hands meeting as staffers were shocked by the sudden notice.

A Bitmain spokesperson said the company has no comment on this at the moment.

The email follows news on Tuesday morning that Bitmain has changed its corporate structure in the registration filing with government agencies. Based on new update, after the change, Wu has taken over the roles of executive director and legal representative of Bitmain from Zhan.

It’s not clear how Bitmain’s board reached the abrupt decision or if Zhan was bought out of his shares. As of September last year when Bitmain filed the IPO application, Zhan was still a major shareholder of Bitmain with 36 percent of Bitmain’s holding company while Wu owned 20 percent.

Both Wu and Zhan served as co-CEO of Bitmain and stepped down from the role in March this year after its IPO failed.

Jihan Wu image via CoinDesk

Editor’s note: This article has been updated to clarify that Zhan owns 60 percent of Beijing Bitmain Technology but only owns 36 percent of Bitmain Holdings, the parent company of the Beijing Bitmain subsidiary. 

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.


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