Swan Bitcoin has filed a lawsuit against Proton Management and six former employees, accusing them of systematically stealing billions of dollars of Bitcoin mining technology with help from Tether.
On September 25, 2024, SwanBitcoin ordered Proton Management and six former employees to systematically exploit a billion-dollar Bitcoin mining technology with assistance from former financial partner Tether. A lawsuit was filed for theft.
Swan has filed a lawsuit in Los Angeles federal court against six former employees, accusing them of orchestrating a conspiracy to divert billions of dollars in Bitcoin mining operations to the newly formed Proton Management Company.
The plan, described in legal filings as a “rain and hellfire” strategy, unfolded over two months and involved key players including Rafael Zagry, former chief investment officer at Swan and now CEO of Proton. It culminated on August 8, 2024, when the employee resigned from the company. along with some others. Proton Management was incorporated in the British Virgin Islands on August 2, 2024, and all defendants joined Proton.
According to Swann, the mass resignations were a calculated plot to destroy the foundations of Swann’s operations, strategically timed with an internal blueprint laid out by Zagri. According to the lawsuit, these schemes were designed to use exploited trade secrets and insider knowledge to uncover a clone of Swann’s lucrative mining operations at Proton.
Source: Swan Complaint Litigation
Claims against Tether
Swann has significant claims against Tether, but is not named as a defendant in the lawsuit. According to Swann, Tether played a vital role in assisting with asylum seekers. Tether previously funded Swann’s Bitcoin mining operation in Tasmania, Australia, in 2023. But in late June, the stablecoin giant began encouraging Swan employees to join Tether and other organizations, the complaint said.
Tether advisor Zach Lyons told Swann employees that “Tether no longer valued the company and suggested they could continue working with another company, Tether.” It is said that
By mid-July, Mr. Zagli allegedly began causing chaos within the company. The complaint alleges that Mr. Zagley undermined Swann CEO Corey Klipsten and influenced Swann employees to resign. As a result, Swann was forced to cancel its IPO plans, close its managed Bitcoin mining division, and lay off 45% of its staff by July 22nd.
On August 9, just one day after the mass resignations, Tether’s lawyers filed a “notice of default” against Swann, accusing him of breaching the funding agreement. According to Swann, this was part of a broader plan to allow Tether to replace Swann with Proton in Bitcoin mining contracts.
According to the complaint, Proton was built on trade secrets and proprietary information stolen from Swann and copied its entire business model. Mr Swann claimed the plan was designed to dismantle the company’s competitive base.
“Defendants carried out a pre-planned scheme to steal treasures from Swann’s Bitcoin mining operations and recruit Swann mining personnel; intercept Swann’s financing arrangements; and steal treasures from Swann’s Bitcoin mining operations. Major Tether will be used as a “legal cover-up” of their wrongdoings. Swann’s market competitiveness was irreparably harmed,” Swann said in its lawsuit.
Mr. Swan’s legal representatives at Gibson, Dunn & Crutcher, led by partners Harris M. Mufson and Ilyssa Stacy Samplelin, are confident in recovering their client’s rights. “Swan’s theft of trade secrets and confidential information is astonishing,” Moufson said. “We are committed to fully vindicating our clients’ rights.”
Swan Bitcoin continues its legal battle, seeking legal protection for Proton and its former employees in order to remain competitive in the market.
