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Jihan Wu, co-founder and former CEO of bitcoin mining giant Bitmain, is gearing up to launch his new venture Matrix, sources familiar with the matter told The Block.
Bitmain announced leadership changes in March following the lapse of its initial public offering (IPO) application. Haichao Wang took over as the new CEO, while Co-founders Micree Zhan and Jihan Wu continued to be the firm’s directors.
Four sources have now told The Block that Wu’s new venture Matrix, a cryptocurrency custody and trading firm, is expected to go live before the end of July.
Matrix is said to have incubated within Bitmain and is aligned with its wider strategic plan. Sources said that Bitmain was building the unit internally before spinning it off into a separate legal entity in February.
While Matrix is holding talks with prospective clients worldwide, Bitmain would be one of its biggest clients, the report stated. Matrix will provide its custodial and lending services to Bitmain and expects to attract a liquid pool for its over the counter (OTC) offering from the latter.
With Bitmain generating a significant volume of crypto assets as a miner, “[Matrix] will be the biggest OTC desk and asset-manager [in the world] overnight,” said one source, adding, “With liquidity like that, [low] prices follow.”
The source said that the new venture should enjoy a competitive edge in the Asian market as it is “a lot more price sensitive.”
Two sources said that Wu, who holds a 20.5% stake in Bitmain, is currently running the new firm as Chairman. One source suggested that Matrix could be part of Zhan and Wu’s exit strategy, as they are reportedly facing political pressure not to liquidate their stake in Bitmain.
Given the unfavorable regulatory situation in China, Matrix is expected to have an offshore holding company. That said, some are also speculating China could grant a monopoly to the firm as part of its efforts to have “greater oversight over the underground market.”
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