Swan Bitcoin sues former executives for alleged theft from BTC mining company

Swan Bitcoin has sued several former employees, accusing them of illegally taking highly prized components of its BTC mining business.

Filed September 25, the complaint claims these executives, who now run Proton Management, conspired to misappropriate Swan’s intellectual property and obtained funding from Tether to create a “counterfeit competitor.”

Hell’s Rain and Fire Plan

The court filing alleges that Proton Management executives executed a “rain and fire from hell” plan by stealing Swan’s proprietary software, the Bitcoin Network Operating Center (BNOC), and sensitive documents for their new company. These documents included confidential business strategies, customer information and key operational data.

The financial services company also claims that Proton persuaded Tether, its backer, to cut ties and support it in order to “irreparably harm Swan’s ability to compete in the market.” The lawsuit points out that the stablecoin issuer played a key role in the hostile takeover by providing “legal cover” and cites an email discussing its plan to send a “default notice” to the company.

The story dates back to mid-2023, when CEO Cory Klippsten partnered with Tether CFO Giancarlo Devasini on a Bitcoin mining venture in Australia. Swan managed it, while Tether financed the project through its subsidiary BFX Ventures. In July 2023, they created 2040 Energy, a mining entity funded by Tether and jointly overseen by the two companies.

Tensions arose in early 2024 when Swan’s chief investment officer, Raphael Zagury, and key consultants allegedly plotted to transfer control of the mining business. In June, discussions to split mining operations began, with Tether showing interest in supporting a new entity.

In July, Zagury and Devasini reportedly finalized their plans, adding the former to 2040 Energy’s board of directors and moving assets to Proton. In early August, several executives resigned and Tether informed Swan that Proton would replace them in the mining deal.

Swan’s response and legal action

Swan claims he was blindsided by the resignations and actions of the stablecoin issuer, accusing Proton of plotting to poach its employees and take over its mining operations. The lawsuit seeks a permanent injunction to prevent the new company from further disrupting its operations, as well as the return of stolen equipment and confidential materials.

The company is also asking for a jury trial and for damages to be determined by the court. In addition to these legal challenges, Swan was reportedly forced to delay its IPO plans and lay off employees following its decision to exit the mining sector.