Tether files lawsuit against Swan Bitcoin over joint venture dispute!
Stablecoin issuer Tether has filed a lawsuit against Bitcoin financial services company Swan Bitcoin, accusing the firm of “significant breaches” in their agreements.
In a statement to Cointelegraph on Jan. 15, Tether, along with co-claimant 2040 Energy, confirmed the legal action against Swan Bitcoin.
The firm stated:
“Throughout our relationship with Swan, Tether has consistently acted in good faith, supported mutual business objectives, and adhered to all relevant agreements,” Tether said. “Conversely, Swan has acted recklessly, and their actions have resulted in significant breaches by them of the agreements between us. Consequently, we have been compelled to take necessary measures to protect our investment.”
The case filed in the High Court of England and Wales escalates an ongoing legal battle between the two companies.
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What sparked the dispute?
Swan and Tether established 2040 Energy in 2022 as a joint Bitcoin mining venture. Under the partnership, Tether provided funding while Swan handled operations, according to Swan Bitcoin filings.
Swan Bitcoin alleged that former employees from its mining arm stole proprietary information, including software code and business strategies, to form a rival company called Proton Management.
Swan described the employees’ actions as part of a scheme labeled “rain and hellfire,” designed to sabotage Swan’s role in the joint venture.
The company claimed that key personnel carried out this plan, including Michael Holmes, its former head of business development, and Raphael Zagury, its ex-chief investment officer and mining head, who now serves as Proton’s CEO.
Swan accused Proton of misusing its confidential trade secrets to establish itself as a direct competitor, which it argued had “irreparably harmed Swan’s ability to compete in the market.”
According to court filings, Proton Management allegedly convinced Tether to cut ties with Swan and back Proton in the mining venture instead.
On Aug. 12, 2024, Swan CEO Cory Klippsten was removed as the CEO of 2040 Energy, and Proton officially took over the operational and administrative functions of the mining operations, per the complaint.
Swan Bitcoin also accused Tether of facilitating what it described as a “hostile takeover” of its mining operations.
Tether has denied any wrongdoing, asserting that it acted by its contractual rights under the joint venture agreement. In a statement to Cointelegraph on Sept. 27, 2024, Tether 2024, said:
“Tether is aware of recent allegations made in a lawsuit that mentions a subsidiary of Tether dedicated to proprietary mining and other investments. While Tether is not a named defendant in the case, we have taken note of the claims and deny any implications of wrongdoing”
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Swan Bitcoin’s legal troubles
Swan Bitcoin also launched legal action against its law firm, Gibson, Dunn & Crutcher, in November 2024, accusing it of malpractice.
The company claimed the firm abandoned its case against Proton after taking on Tether as a client, violating attorney ethics rules prohibiting dropping a client to avoid conflicts of interest.
Klippsten described Gibson’s move as a betrayal. “Swan was blindsided,” Klippsten said, arguing that the firm’s decision caused significant damage to Swan’s mining business.
Swan Bitcoin did not respond to Cointelegraph’s request to comment by the time of publication. Read more at cointelegraph.com.
