- Swan Bitcoin has filed a lawsuit against ex-employees for stealing its own mining software and forming Proton.
- Tether is said to have supported the former staff’s plan to undermine Swan’s business operations.
Swan Bitcoin, a prominent Bitcoin [BTC] financial services company, has taken legal action against former employees of its mining division, accusing them of misappropriating proprietary software to start a rival company.
What has happened so far?
According to the lawsuit, filed in the US 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 lawsuit further alleged that Tether, the issuer of the largest stablecoin USDT, aided the scheme by cutting ties with Swan and aligning itself with Proton.
Swan accused the former staff of orchestrating a mass layoff, with key business partners and suppliers undermining their former employer’s operations.
In their court file on the September 25Swan’s lawyers claimed:
“They devised a plan to steal Swan’s mining operations from within, usurp Swan’s role and remove Swan from the Tether joint venture. They called it ‘rain and hellfire.’”
The lawyers further added:
“[They] were stealing the crown jewels from Swan’s Bitcoin mining company.”
Ex-employees accused
According to the filing, Michael Holmes, former head of Swan’s Business Development, is identified as Proton’s “leader”, while Raphael Zagury, who was previously Swan’s Chief Investment Officer and head of mining, now holds the position of CEO at Proton. .
Swan’s allegations suggested that both played a crucial role in the implementation of a scheme called the ‘rain and hellfire’ scheme, which aimed to unlawfully obtain Swan’s confidential business information and trade secrets essential to the running of a Bitcoin mining operation.
The company reported that it felt “blindsided” by a sudden influx of resignation letters from its staff on August 8 and 9.
Just a few days later, on August 12, Tether Swan announced that Proton would take over its mining financing deal.
Amid this news, the CEO of Swan Cory Klipsten went to X and noted:
“+132% year-on-year @Swan financial services revenue has increased enormously. It’s been a great last twelve months of product launches (Swan IRA, Swan Vault), and I look forward to more geo and product launches soon.”
Klippsten further added,
“Mining has always been separate and segregated. Recent news has no impact on our core activities.”
What’s next for Swan Bitcoin?
Therefore, Swan Bitcoin asserted going forward 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 dismissal.
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 material.
In conclusion, Swan has requested a jury trial to determine the extent of damages suffered as a result of this alleged misconduct.