Swan Bitcoin sued six former employees for stealing proprietary code and confidential documents to launch a rival mining firm.
Swan filed a lawsuit with a federal court in Los Angeles on September 25, alleging that six of its former employees conspired to “harm Swan’s ability to compete in the market” by stealing what the filing referred to as “crown jewels” from its mining business.
Swan Bitcoin, established in 2019, provides financial services to investors. Subsequently, Swan Mining was established in 2023. The complaint asserts that the defendants implemented a premeditated scheme known as “rain and hellfire” to gain control of Swan’s mining operations from within.
According to Swan, before their resignation between August 8 and August 9, the former employees seized thousands of confidential documents and proprietary code for the company’s mining monitoring software.
In addition, the defendants have been accused of soliciting key personnel and securing Swan’s business associates, including stablecoin issuer Tether. The complaint also stated that the company responsible for USDT was specifically designed to offer “legal protection” for the deeds of the “copycat company.”
On August 12, Tether, a critical funding partner, supplanted Swan with Proton in their mining agreement mere days after the defendants submitted their resignations.
The partnership also introduced a managed mining service for institutional investors to enhance its capacity to 100 exahashes by 2026. The future of these initiatives may be affected by the recent lawsuit.
Furthermore, the complaint discloses that Swan encountered revenue challenges in its mining division. In July, Swan’s CEO, Cory Klippsten, informed the community that the company may discontinue its managed mining service. Swan was reportedly contemplating simultaneously selling its mining business to Tether.
Swan contends that the stolen information gave Proton an unwarranted advantage in the competitive Bitcoin mining market.
The organization asserts that it has evidence of the robbery and subsequent attempts to conceal it. It is initiating the litigation to safeguard its rights, accusing the defendants of breach of contract, aiding and abetting a breach of duty of loyalty, and misappropriating trade secrets.
Swan has requested a jury trial to ascertain the damages and asked the court to advocate for returning the stolen equipment and confidential material. Additionally, Swan is requesting a permanent injunction.
Klippsten has reassured the community that the financial services firm has had a profitable year, with a 132% year-on-year revenue increase, despite the legal tussle. He explained that the recent news does not affect the core business, as the mining branch is “separate and segregated.”.
Despite the legal tussle, Klippsten has reassured the community that the financial services firm has had a profitable year, with a 132% year-on-year revenue increase.
Swan’s revenue increase resulted from the introduction of new products, such as the Bitcoin Individual Retirement Accounts, which were launched in collaboration with Equity Trust Company, a U.S.-based self-directed IRA provider. Swan customers can administer Bitcoin within tax-advantaged retirement accounts through the provided service.
