Swan Bitcoin Files Lawsuit Against Former Employees and Tether Alleging Theft of Bitcoin Mining Business
Swan Bitcoin has taken legal action against a group of former employees and consultants, accusing them of orchestrating a plan to steal its profitable bitcoin mining business in collaboration with Tether, a former ally and fundraising partner. The lawsuit alleges that the defendants engaged in a scheme to pilfer Swan’s trade secrets, including proprietary code, hash-rate optimization techniques, and financial models, to establish a rival bitcoin mining operation called Proton Management.
According to the lawsuit, the defendants resigned en masse from Swan on August 8 to join Proton after two months of planning and theft of Swan’s intellectual property. Swan claims that Tether, although not named as a defendant in the suit, provided approval and support for the defendants’ actions.
Swan had previously received funding from Tether for its bitcoin mining operation in Tasmania, Australia, and was in talks for another funding round in early 2023. Tether had pledged a $25 million investment in Swan’s series C fundraising round, valuing the company at $1 billion. However, the lawsuit alleges that Tether’s advisors began undermining Swan behind the scenes, leading to the collapse of the funding commitment and the subsequent exodus of employees to Proton.
Despite Tether’s initial support and praise for Swan’s CEO, Cory Klippsten, the stablecoin company allegedly conspired with the defendants to destabilize Swan and facilitate the creation of Proton. The lawsuit claims that Tether’s actions resulted in Swan abandoning its plans for an IPO, shutting down its mining unit, and laying off a significant portion of its staff.
On August 8, the defendants left Swan abruptly, with Tether serving Swan with a notice of default the following day, claiming a breach of their funding agreement. Swan alleges that Tether then engaged Proton Management to provide services using former Swan employees, effectively replicating Swan’s mining business illegally.
Swan’s lawsuit seeks injunctions against the defendants and seeks restitution, disgorgement, and punitive damages from Proton. While Tether is not named as a defendant in the case, the company has denied any wrongdoing and stated its commitment to its core values.
As the legal matter unfolds, both Swan and Tether continue to operate within the cryptocurrency space, with the lawsuit shedding light on the complexities and challenges within the industry.