Swan Bitcoin has filed a lawsuit against several former employees, accusing them of stealing proprietary information and launching a competing Bitcoin mining company. 

The lawsuit, filed in the U.S. District Court for the Central District of California on September 25th, 2024, claims the employees resigned in early August to form Proton Management Ltd., a direct competitor.

Swan alleges that former Head of Business Development Michael Holmes and ex-Chief Investment Officer Raphael Zagury led the group in taking confidential business information necessary for running Swan’s Bitcoin mining operations. 

The company claims this harmed its ability to compete in the industry.

The suit also implicates Tether, Swan’s former partner in its mining operations. Tether, a major player in the space, allegedly supported Proton after severing ties with Swan. 

According to the filing, this allowed Proton to take over Swan’s position in a mining joint venture with Tether—a move the lawsuit describes as part of a broader hostile takeover, referred to internally by the former employees as the “rain and hellfire” plan.

The resignations of key personnel occurred on August 8th and 9th, 2024, and just days later, Swan was informed that it had been replaced by Proton in the Tether joint venture.

Swan had launched its managed mining service in May 2024 in partnership with Tether, with a goal of reaching 100 exahashes of computing power by 2026. 

By July, CEO Cory Klippsten had raised concerns about the business’s future, suggesting revenue challenges could force a sale of the mining division to Tether.

Swan’s lawsuit seeks a permanent injunction against Proton, the return of equipment and confidential material, and damages to be determined at trial. 

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