Swan Bitcoin Sues Former Execs

Swan Bitcoin initiated legal proceedings against Proton Management, a competitor, and numerous former employees this week. The company accused them of a deliberate endeavor to undermine and seize its Bitcoin mining operations.

This ongoing legal dispute in the US District Court for the Central District of California emphasizes an alleged betrayal by individuals previously entrusted with the confidential aspects of Swan’s software and business connections.

The allegations depict a corporate espionage scenario in which former Swan employees are purportedly responsible for the company’s internal destabilization. They are purported to have stolen customer data and critical software code.

Following their resignation, they employed this information to establish a new company, Proton Management. Their objective was to engage in direct competition with their former employer.

CEO Cory Klippsten of Swan stated on X that the company’s mining operations have always been “separate and segregated.” He also said the most recent news does not affect Swan’s primary operation.

Swan Bitcoin alleges that the former CIO and business head orchestrated a mining takeover plan

Michael Holmes, previously Swan’s Business Development Head, was identified as the mastermind behind Proton in the lawsuit. In the interim, Raphael Zagury, who previously served as Swan’s CIO and mining chief, has assumed the position of CEO at Proton.

According to the complaint, Proton employees were also accused of poaching staff from Swan’s mining team and redirecting Swan’s financial sponsor, Tether, to support their operations.

Swan claimed that a strategy component was for Tether to issue a default notice to Swan, which would serve as a legal pretext for the hostile acquisition.

Swan stated that it was taken aback by a sudden influx of resignations on August 8 and 9. On August 12, Tether allegedly informed the company that Proton would be assuming its role in the mining agreement, which resulted in another surprise.

Swan Demands Permanent Injunction in Lawsuit Over Alleged Misconduct by Ex-Employees and Tether

In addition, Swan contends that this malfeasance violates contractual confidentiality and causes immediate and irreversible harm to its operations, which could result in the loss of business opportunities and a tarnished reputation.

The legal complaint implies that the former employees, in conjunction with Tether, intended to dismantle Swan’s mining business from the inside out.

Swan has requested the recovery of misappropriated materials and a permanent injunction against Proton. The resolution of this litigation has the potential to establish a precedent for managing intellectual property disputes in the cryptocurrency sector.

In May 2024, Swan Bitcoin initiated its managed mining service for institutional investors in partnership with Tether. The company’s objective is to achieve 100 exahashes by 2026.

Nevertheless, CEO Cory Klippsten declared in July that the managed mining operation would likely cease due to the company’s inability to generate sufficient revenue immediately. Simultaneously, the organization implemented workforce reductions and declined to disclose securities.