Swan Bitcoin is suing former employees, accusing them of stealing proprietary software and launching a competing Bitcoin mining business under the firm Proton Management. The lawsuit, filed on September 25, alleges that the former staff members, including ex-business head Michael Holmes and former mining head Raphael Zagury, orchestrated a scheme to undermine Swan’s position in the market.
Swan claims the employees, now at Proton, convinced Tether, a key funding partner, to cut ties with Swan and instead partner with Proton. The alleged plan, referred to as “rain and hellfire,” aimed to harm Swan’s competitive standing in the Bitcoin mining space.
The lawsuit details that the group stole confidential business information and trade secrets essential for operating Swan’s Bitcoin mining service. In August 2024, Swan was blindsided by a wave of resignations, just days before Tether notified Swan that Proton would replace them in the mining agreement.
Swan Bitcoin initially partnered with Tether in May 2024, targeting 100 exahashes of computing power by 2026. However, by July, Swan’s CEO, Cory Klippsten, suggested the business might close due to revenue struggles.
Swan is seeking damages, a jury trial, and a permanent injunction to stop Proton from further damaging its mining operations. The lawsuit also demands the return of stolen equipment and confidential material.
This legal battle highlights growing tensions in the competitive world of Bitcoin mining.