- Swan Bitcoin filed a lawsuit against ex-employees for stealing proprietary mining software and forming Proton.
- Tether allegedly supported the former staff’s plan to undermine Swan’s business operations.
Swan Bitcoin, a prominent Bitcoin [BTC] financial services firm, has initiated legal action against former employees from its mining division, accusing them of misappropriating proprietary software to launch a rival business.
What happened so far?
According to the lawsuit, filed in the U.S. District Court for the Central District of California, the ex-employees allegedly stole Swan Bitcoin’s mining software code and formed a new entity, Proton Management.
The suit further claimed that Tether, the issuer of the largest stablecoin USDT, aided the scheme by severing ties with Swan and aligning with Proton.
Swan accused the former staff of orchestrating an en-masse resignation, taking key business partners and vendors to undermine their former employer’s operations.
In their court filing on the 25th of September, Swan’s attorneys asserted,
“They hatched a plan to steal Swan’s mining business from the inside, usurp Swan’s role, and cut Swan out from the Tether joint venture. They dubbed it ‘rain and hellfire.’”
The attorneys further added,
“[They] were stealing the crown jewels from Swan’s Bitcoin mining business.”
Ex-employees accused
According to the filing, Michael Holmes, Swan’s former Head of Business Development, is identified as the “ringleader” of Proton, while Raphael Zagury, who previously served as Swan’s chief investment officer and head of mining, now holds the position of CEO at Proton.
Swan’s allegations suggested that both played crucial roles in implementing a scheme dubbed the “rain and hellfire” plan, which aimed at unlawfully acquiring Swan’s confidential business information and trade secrets essential for running a Bitcoin mining operation.
The company reported feeling “blindsided” by a sudden influx of resignation letters from its staff on the 8th and 9th of August.
Just a few days later, on the 12th of August, Tether notified Swan that Proton would take over its mining funding agreement.
Amidst this news, Swan’s CEO Cory Klippsten took to X and noted,
“+132% YoY @Swan financial services revenue is up big. Been an awesome last 12 months of product launches (Swan IRA, Swan Vault), excited for more geo and product launches soon.”
Klippsten further added,
“Mining has always been separate and segregated. Recent news does not affect our core business.”
What next for Swan Bitcoin?
Hence, moving forward, Swan Bitcoin claimed that it would continue to investigate the alleged appropriation of its proprietary data and trade secrets by former executives and employees and the circumstances of their resignations.
As of now, the company is seeking a permanent injunction against Proton to prevent further disruption of its mining operations and is demanding that the court compel the return of stolen equipment and confidential materials.
In conclusion, Swan has requested a jury trial to determine the extent of damages incurred as a result of this alleged misconduct.
