Swan Bitcoin has taken legal action against a group of former employees, accusing them of unlawfully taking crucial elements of its Bitcoin mining business to form a rival company. The lawsuit, filed on September 25, alleges that these ex-staff members, now leading Proton Management, wrongfully used Swan’s intellectual property and secured financial backing from Tether to establish a “fake competitor.”
The Alleged “Rain and Hellfire” Scheme
Swan’s court filing outlines that Proton’s leadership executed what it describes as a “rain and hellfire” scheme, involving the theft of Swan’s proprietary Bitcoin Network Operating Center (BNOC) software along with other confidential documents. These materials, which included strategic plans, client data, and operational insights, were allegedly used to launch Proton’s competing Bitcoin mining venture.
Additionally, Swan claims Proton convinced Tether, its previous financial supporter, to cut ties with Swan and instead fund Proton’s new venture. According to the lawsuit, emails from Tether discussed a plan to issue a “default notice” to Swan, further harming its ability to compete effectively.
A Collaboration Gone Sour
The conflict dates back to mid-2023, when Swan CEO Cory Klippsten and Tether CFO Giancarlo Devasini teamed up for a Bitcoin mining project in Australia. Swan was responsible for management, while Tether provided financial support through its subsidiary, BFX Ventures. In July 2023, both companies launched 2040 Energy, a joint Bitcoin mining entity.
However, in early 2024, tensions began to surface when Swan’s Chief Investment Officer, Raphael Zagury, along with several consultants, allegedly started working on a plan to seize control of the mining business. By June, discussions about spinning off the mining operations were underway, with Tether expressing interest in backing a new entity. By July, Zagury and Devasini had reportedly finalized their plans to shift assets to Proton, and by August, several Swan executives resigned. Shortly afterward, Tether informed Swan that Proton would take over the mining project.
Swan’s Legal Response
Caught off guard by the resignations and Proton’s actions, Swan Bitcoin is now seeking a permanent injunction to prevent Proton from continuing to disrupt its business operations. The company is also demanding the return of stolen assets and proprietary materials, while requesting a jury trial to determine compensation for damages.
This legal battle has already impacted Swan, forcing the company to delay its IPO plans and lay off employees as it exits the Bitcoin mining business. The outcome of the lawsuit will determine the future of Swan’s operations and its ability to compete moving forward.
