Swan Bitcoin Sues Ex-Employees for Allegedly Stealing Software Code and Confidential Data

Swan Bitcoin has claimed that six former employees have stolen its trade secrets to create a similar firm named Proton Management.

Bitcoin company Swan is suing its former employees, alleging that they stole trade secrets to create a competing firm. The employees allegedly carried out this corporate espionage to steal Swan’s Bitcoin mining business at Tether’s Direction.

Swan has claimed that six former employees have stolen its trade secrets to create a similar firm named Proton Management. Swan has accused Tether of being part of the ‘rain and hellfire plan.’ The former employees are accused of stealing highly proprietary code, hash-rate optimization techniques, and financial models.

The lawsuit further claims that the ex-employees colluded with Tether to undermine Swan Bitcoin’s mining operations, stealing their vendors and business partners. The defendants are accused of breach of contract, misappropriation of trade secrets, and unfair competition.

Swan Bitcoin was founded in 2019 to provide investors with financial services, and they launched their Bitcoin Mining operations in 2023. The stablecoin giant Tether funded Swan’s bitcoin mining operation the previous year.

The lawsuit now claims that Tether was double-dealing with Swan Bitcoin throughout this period. Swan has accused Tether advisor Zach Lyons of having secret meetings with the former head of mining, Raphael Zagary, and other ex-employees. After this incident, Swan Bitcoin ended its managed mining unit and canceled its first public offering (IPO).

The defendants then resigned from Swan and started Proton Management company. On August 12, Tether replaced Swan with Proton in their mining contract, and a deal for a managed mining service for institutional investors was made between both parties.

Swan has asserted that this misconduct has inflicted irreversible damage to its operations, potentially leading to the loss of business opportunities and a tarnished reputation. The lawsuit cites a calculated strategy where the former employees, alongside Tether, aimed to dismantle Swan’s mining business from the inside out.

Now, Swan Bitcoin seeks permanent injunctions against the defendants, restitution and punitive damages against Proton Management, and wants the items that were taken without authorization. The verdict in this legal battle can set a standard for resolving IP conflicts in the cryptocurrency sector.

Cory Klippsten: Mining Operations Unaffected

Swan’s CEO Cory Klippsten stated on X (formerly Twitter) that the mining operations have always been conducted in a “separate and segregated” manner. He added that mining operations were largely unaffected by the news of the alleged theft of software codes.

+132% YoY ?? @Swan financial services revenue is up big.

Been an awesome last 12 months of product launches (Swan IRA, Swan Vault), excited for more geo and product launches soon ??

Mining has always been separate and segregated. Recent news does not affect our core business.

The statement comes after Swan filed a lawsuit against its former employees and a new crypto mining firm for allegedly stealing trade secrets. According to the complaint, the employees used the stolen assets to form a competing entity named Proton Management.

The six employees are accused of stealing highly proprietary code, hash-rate optimization techniques, and financial models, then colluding with Tether to undermine Swan Bitcoin’s mining operations.

This story develops. Keep checking back at CryptoSlate for more updates.