Lawrence Damilola
Swan Bitcoin has filed a lawsuit against several former employees and competitor Proton Management, accusing them of stealing proprietary software and attempting to take over its Bitcoin mining business.
The case, filed in the U.S. District Court for the Central District of California, names Michael Holmes, former Head of Business Development, and Raphael Zagury, ex-CIO and mining chief at Swan, as the key figures behind the alleged scheme.
According to the lawsuit, Holmes and Zagury and several other employees resigned from Swan in early August 2024. Swan alleges that they took confidential software code and customer data before leaving, which they later used to establish Proton Management. The new company is directly in competition with Swan’s mining operations.
Swan also claims that Proton persuaded Tether, a major financial backer of Swan’s mining project, to cut ties with Swan and instead support Proton. Tether informed Swan of this decision shortly after the wave of resignations in August. Swan argues that this move was part of a coordinated effort by former employees to seize control of its mining operations.
Swan CEO Cory Klippsten stated on X that the company’s mining activities have always been “distinct and separated.” He also mentioned that the most recent developments do not affect Swan’s main business.
+132% YoY 🚀 @Swan financial services revenue is up big.
— Cory Klippsten 🦢 Swan.com (@coryklippsten) September 27, 2024
Been an awesome last 12 months of product launches (Swan IRA, Swan Vault), excited for more geo and product launches soon 😎
Mining has always been separate and segregated. Recent news does not affect our core business.
Allegations of Misconduct and Espionage
Swan’s lawsuit accuses its former employees of breaching confidentiality agreements and engaging in corporate espionage. The company alleges that Holmes and Zagury planned to sabotage Swan’s mining business and divert resources to Proton. The legal filing describes this scheme as “rain and hellfire,” aimed at removing Swan from its role in the joint venture with Tether.
Swan Bitcoin further claims that Proton has been actively poaching its staff and undermining its business relationships. The lawsuit alleges that Proton’s actions have caused significant disruption to Swan’s operations, with immediate adverse effects on its mining business.
The complaint requests a permanent injunction to stop Proton from using the misappropriated materials and seeks to return all proprietary information taken by the former employees. Swan is also asking for damages to be determined at trial.
Swan Bitcoin launched its managed mining service for institutional investors in partnership with Tether in May 2024, with plans to reach 100 exahashes by 2026. However, the lawsuit indicates that Swan’s mining business faced financial challenges as early as July 2024, leading to concerns about its future viability.
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Lawrence does not hold any crypto asset. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
