Swan Bitcoin has filed a lawsuit against former employees and Tether, accusing them of conspiring to steal proprietary Bitcoin mining technology and business relationships.
Swan Bitcoin, a prominent Bitcoin financial services company, has filed a lawsuit accusing several former employees and Tether, the issuer of the world’s largest stablecoin, of conspiring to steal its Bitcoin mining business. The lawsuit, filed on Wednesday in the U.S. District Court for the Central District of California, alleges that former Swan executives and consultants orchestrated a "rain and hellfire" scheme to usurp Swan’s “crown jewels” — its proprietary Bitcoin mining technology and business relationships.
Swan sues former executives and consultants for plotting to steal its billion-dollar #Bitcoin mining business, allegedly in coordination with investor and JV partner Tether. pic.twitter.com/N7T871eku9
— TFTC (@TFTC21) September 26, 2024
The defendants, including former Chief Investment Officer and Head of Mining Raphael Zagury, allegedly resigned en masse in August 2023 and formed a competing firm called Proton Management. Swan claims these former employees stole sensitive information, including proprietary code from its Bitcoin mining monitoring software, and solicited Swan’s business partners and personnel to aid in the takeover.
Central to the lawsuit is Tether, which Swan alleges played a key role in the plot. According to the complaint, Tether, which was Swan’s financing partner, issued a "default notice" shortly after the resignations, positioning Proton to take over Swan’s Bitcoin mining management operations. Swan argues that this maneuver was designed to provide legal cover for the scheme.
"The evidence of Defendants’ brazen theft is overwhelming," stated Swan’s legal team in the complaint. The lawsuit seeks a permanent injunction to prevent Proton from further disrupting Swan’s operations, as well as the return of stolen equipment and confidential materials. Swan is also requesting a jury trial and monetary damages to be determined at trial.
Swan’s attorneys, Harris M. Mufson and Ilissa Stacy Samplin from Gibson, Dunn & Crutcher, emphasized the seriousness of the allegations. "As laid out in Swan's complaint, the theft of Swan's trade secrets and confidential information is staggering and alarming," Mufson said in a statement.
The case now awaits further proceedings under U.S. District Judge Wesley L. Hsu. Swan aims to protect its intellectual property and maintain its competitive edge in the Bitcoin mining sector, a key component of the company’s business strategy.
