Swan Bitcoin, a cryptocurrency company, has taken legal action against former employees and a competitor, Proton Management, for allegedly sabotaging its Bitcoin mining operations. The lawsuit, filed in the US District Court for the Central District of California, claims that the ex-employees stole critical software code and customer data to start their own company, Proton Management, which directly competes with Swan. Swan CEO Cory Klippsten assured that the mining operations have always been separate and segregated from the company’s primary business.
In the lawsuit, Michael Holmes, who was once Swan’s Business Development Head, was identified as the mastermind behind Proton Management. Meanwhile, Raphael Zagury, who previously held the roles of CIO and mining chief at Swan, is now serving as Proton’s CEO. The complaint also alleges that Proton employees poached staff from Swan’s mining team and redirected financial support from Tether, a backer of Swan, to their own operations. Swan claims that Tether issued a default notice to Swan as part of the hostile takeover plan orchestrated by the former employees.
Swan was reportedly caught off guard by a series of resignations in August, followed by Tether informing the company that Proton would take over its role in the mining agreement. Swan believes that the misconduct by the ex-employees and Tether has caused irreversible damage to its operations, potentially leading to the loss of business opportunities and a damaged reputation. As a result, Swan has requested a permanent injunction against Proton and the return of misappropriated materials, setting a precedent for handling intellectual property disputes in the cryptocurrency industry.
Swan Bitcoin had launched a managed mining service for institutional investors in partnership with Tether earlier in 2024, with the goal of achieving 100 exahashes by 2026. However, CEO Cory Klippsten announced in July that the managed mining operation was likely to shut down due to revenue challenges. The company also underwent workforce reductions and decided against going public. Despite these setbacks, Swan continues to focus on its core business and explore new product and geographical launches in the future.
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