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

Filed on September 25, the lawsuit claims these executives, now running Proton Management, conspired to misappropriate Swan’s intellectual property and secured funding from Tether to create a counterfeit competitor.

Rain and Hellfire Plan

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

The financial services company also claims that Proton persuaded Tether, its financial backer, to cut ties and support it instead to “irreparably harm Swan’s ability to compete in the market.” The lawsuit outlines 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 firm.

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 provided management, while Tether financed the project through its subsidiary BFX Ventures. By July 2023, they created 2040 Energy, a mining entity funded by Tether and jointly overseen by both companies.

Tensions surfaced in early 2024 when Swan’s Chief Investment Officer Raphael Zagury and key consultants allegedly plotted to shift control of the mining business. By June, discussions to spin off the mining operations began, with Tether showing interest in backing a new entity.

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

Swan’s Response and Legal Action

Swan claims it was blindsided by the resignations and the stablecoin issuer’s actions, accusing Proton of plotting to poach its employees and seize its mining business. 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 material.

The company is also requesting a jury trial and damages to be determined in court. In addition to these legal challenges, Swan has reportedly been forced to delay its plans for an IPO and lay off employees following its decision to exit the mining business.