- 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.
As an analyst with years of experience in the ever-evolving world of cryptocurrencies, I’ve seen my fair share of drama and intrigue. The latest development between Swan Bitcoin and its former employees, along with Tether, is nothing short of a blockchain soap opera.
Swan Bitcoin, a well-known financial services company specializing in Bitcoin (BTC), has taken legal steps against some ex-employees from their mining department. They are alleging that these former workers misused confidential software to establish a competing business of their own.
What happened so far?
The court document, submitted to the U.S. District Court for the Central District of California, claims that former workers are accused of stealing Swan Bitcoin’s mining software code. Subsequently, they established a new company called Proton Management, according to the accusations made in this lawsuit.
The lawsuit also asserted that Tether, the company behind the biggest stablecoin USDT, contributed to the plan by ending its relationship with Swan and partnering with Proton instead.
The former employee was accused by Swan of masterminding a mass departure, with the intent of luring crucial business associates and suppliers away, thereby sabotaging their previous employer’s business activities.
In their court filing on the 25th of September, Swan’s attorneys asserted,
They devised a scheme to secretly seize control of Swan’s mining operation by posing as Swan within the company, undermining Swan’s position, and excluding Swan from the Tether partnership. This plan was called ‘rain and hellfire.’
The attorneys further added,
“[They] were stealing the crown jewels from Swan’s Bitcoin mining business.”
Ex-employees accused
Based on the documentation, it’s stated that Michael Holmes, a previous Head of Business Development at Swan, is referred to as the main figure in Proton. On the other hand, Raphael Zagury, who used to be Swan’s chief investment officer and head of mining, now occupies the CEO role at Proton.
According to Swan’s accusations, it appears that both parties were pivotal in carrying out a strategy called the “rain and hellfire” plot. This plan allegedly aimed at illegally obtaining Swan’s private business details and crucial trade secrets necessary for managing a Bitcoin mining operation.
On August 8th and 9th, the company was taken aback by an unexpected wave of employees submitting their resignations.
In just a few short days, on the 12th of August, Tether informed Swan that Proton would be assuming their mining funding obligations.
Amidst this news, Swan’s CEO Cory Klippsten took to X and noted,
Swan Financial Services has seen a significant 132% increase in year-over-year revenue, a fantastic achievement over the past twelve months. This growth is primarily due to successful product launches like the Swan IRA and Swan Vault. We’re looking forward to more geographical and product expansions in the near future.
Klippsten further added,
“Mining has always been separate and segregated. Recent news does not affect our core business.”
What next for Swan Bitcoin?
Consequently, Swan Bitcoin declared they will further explore the suspected misuse of their exclusive data and trade secrets by ex-executives and staff, as well as the details surrounding their departures.
Currently, the company aims to obtain a long-term court order restricting Proton from interfering with their mining activities any further. They also request the court to make Proton return stolen machinery and sensitive information that was taken unlawfully.
In summary, Swan is asking for a jury trial to decide the amount of damage caused by the alleged wrongdoing.
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2024-09-27 20:08