Swan Bitcoin has filed a lawsuit against Proton Management, a Bitcoin mining company made up of former Swan consultants, alleging that these executives “conceived a ‘rain and hell’ scheme to steal Swan’s mining operations. I did it,” he claimed.
Specifically, the lawsuit alleges that several consultants who participated in Swann’s Bitcoin mining operations misappropriated Swann’s intellectual property to run “copycat companies” that also received funding from Tether. He claims he was planning to do so.
The lawsuit includes emails that appear to discuss the best way to effectuate the withdrawal, stating that “Tether must send a notice of default.”
Screenshot of the lawsuit.
timeline
According to the complaint, Swan Bitcoin CEO Corey Cripsten learned in June 2023 that a Bitcoin mine in Australia was attempting to raise capital. He appears to have discussed the opportunity with Giancarlo Devasini, chief financial officer of both Bitfinex and Tether, who will form a joint venture with Swan providing management and Tether financing. We agreed to establish a business.
The lawsuit also revealed that Tether previously invested in Swan through BFX Ventures.
The following month, Swan’s then chief investment officer Rafael Zagli appears to have taken control of the Australian mining business. This was supported by a group of consultants and employees, many of whom currently work at Proton.
According to the complaint, near the end of July 2023, Tether subsidiary Zettahash entered into an agreement with Swann to form 2040 Energy. The entity was funded by Tether, and a poorly redacted section of the complaint also reveals that Tether “controlled 2040 Energy’s board of directors.”
Mr. Klipsten serves as Swan’s sole director on the 2040 Energy board, with Tether CFO Giancarlo Devasini and Ludovicus Jan van der Velde (former CEO of Tether and current CEO of Tether sister company Bitfinex) joining the 2040 Energy board. He served on the board of directors of Tether.
In February 2024, Tether and Swan launched plans for 2140 Energy to invest in mining operations in Tasmania.
However, this agreement did not go as expected. The executives behind Swann’s Bitcoin mining operation reportedly planned “rain and hellfire” by:
Download the “BNOC” software and set up a company that allows Tether to provide “legal indemnity.”
In June 2024, Zach Lyons of Merlin Capital Partners, an apparent advisor to Tether, allegedly told Swann that Tether was interested in investing.
However, after a few days, Zagri tells Swann that Tether is not interested in most of Swann. The company was interested in mining and proposed separating it out.
Days later, Zagli suggested that Tether would effectively force Klipstein to resign as CEO and accept “capitalization” in exchange for handing over the mining business.
In late July, Mr. Zaghly and Mr. Devasini apparently met and decided to add Mr. Zaghly to 2040 Energy’s board of directors and proposed that 2040 Energy’s Bitcoin be transferred to Mr. Zaghly’s control.
Also in July, Swan announced layoffs and the termination of its managed mining division.
announcement – @swan It is unlikely that a managed mining business will continue in the short term. As we do not expect significant short-term returns from the managed mining segment, we are withdrawing our plans for an IPO in the near future.
Therefore, Swan withdraws from our activities…
— Cory Klippsten 🦢 Swan.com (@coryklippsten) July 22, 2024
In early August 2024, several of these executives began resigning. Tether’s lawyers then sent an email claiming: I spoke with Tether and confirmed that these former employees were not encouraged to leave and do not have any existing arrangements with Tether. ”
Based on another poorly redacted portion of the filing, Tether’s lawyers sent Swan’s lawyers a “Notice of Event of Default” stating that “Swan has breached the 2040 Energy Shareholder Agreement and Defendant Proton “We provided the planned “legal cover” against the government.” It will replace Swan in the energy of 2040 and potentially beyond.
Klipsten stated that the supposed “event of default” by Swann did not provide any assurance that it would be able to maintain the personnel necessary to ensure that 2040 Energy’s operations would be conducted in accordance with the shareholder agreement. It was alleged that this involved a violation of the shareholders’ agreement. Investment notes and sound business practices and commercial principles. ”
A few days later, Klipstein resigned as CEO of 2040 Energy, in part because “Tether accused Swan (again, his company) of violating the shareholder agreement.”
Tether also apparently sent a “Notice of Continuing and Additional Violations,” stating that “Swan is ‘based on the resignation of a significant number of Swan employees who are responsible for the conduct and oversight of ongoing business operations. , further violated the 2040 Energy Shareholder Agreement.” Energy in 2040. ”
Tether’s attorneys further stated, “As of today, Tether is appealing to (defendant) Proton Management, which has indicated that it can provide services to certain former employees of Swan, to ensure that 2040 Energy’s operations comply with the law.” We have made a contract to arrange for it to take place,” he added. Investment Notes, Sound Business Practices and Commercial Principles previously provided by Swann. ”
Since then, Swann has canceled its Series C funding round and plans for an IPO.
no. We just didn’t move forward with partnering with major financing partners for our managed mining operations. Without that revenue, there is no path to a clean S1 IPO in the short term.
— Cory Klippsten 🦢 Swan.com (@coryklippsten) August 12, 2024
Dashboard and optimization
One specific piece of intellectual property that Proton Management has acquired is apparently the Bitcoin Network Operating Center. This is a dashboard that allows mining companies to track several metrics related to their mining operations.
This dashboard can also be used to analyze Bitcoin mining profitability.
Additionally, Swan appears to have performed its own “proprietary” “overclocking and underclocking” procedures to increase the efficiency of its Bitcoin mining operations.
Additionally, it appears that documents related to relationships with customers were also required.
Read more: We asked CEO Swan about layoffs, exit timing, and canceled IPO
In addition to having to delay its IPO, Swann also had to lay off employees and restructure the company following its decision to exit mining operations.
Protoss contacted Tether and Swann for additional background on this lawsuit, and Tether provided the following comment:
“Tether is aware of recent allegations made in a lawsuit that refer to Tether subsidiaries that specialize in proprietary mining and other investments. Although Tether is not named as a defendant in this lawsuit, takes note of the allegations and denies any implication of wrongdoing.
“Tether remains committed to achieving economic freedom, educational empowerment, energy sustainability, and data sovereignty. We are committed to ensuring that our operations and actions are consistent with these values. I believe there is.
“As this is an ongoing legal matter, we will not be commenting further at this time. We will continue to monitor the litigation and provide updates as appropriate.
“In the meantime, Tether’s business operations will continue as usual.”
Updated September 27, 11:47 UTC: Added response from Tether.
Any tips? Please send us an email or ProtonMail. For more news, follow us ×Instagram , Bluesky , Google News , or subscribe to our YouTube channel.
