Tether Sues Swan Bitcoin Over Alleged Breaches in Joint Bitcoin Mining Venture

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Tether, the issuer of the world’s largest stablecoin by market capitalization, has taken legal action against Bitcoin financial services company Swan Bitcoin, accusing the firm of “significant breaches” in their business agreements.

The lawsuit, filed jointly with co-claimant 2040 Energy, has been submitted to the High Court of England and Wales, marking a significant escalation in the conflict between the two companies.

A Disputed Bitcoin Mining Partnership

The dispute centers around 2040 Energy, a Bitcoin mining venture established in 2022 by the stablecoin issuer and Swan Bitcoin. Under the partnership, Tether provided funding while Swan oversaw operations. However, tensions arose after allegations surfaced that former Swan employees misappropriated trade secrets to form a rival company, Proton Management.

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According to Swan, its ex-employees, including Michael Holmes (former head of business development) and Raphael Zagury (former chief investment officer and mining head), orchestrated a scheme dubbed “rain and hellfire” to undermine Swan’s role in the venture. Zagury now serves as the CEO of Proton Management.

Court filings allege that Proton used stolen proprietary information, including software code and business strategies, to establish itself as a direct competitor. Furthermore, Swan claims that Proton persuaded Tether to sever ties with Swan and support Proton’s efforts in the mining business.

In August 2024, Swan CEO Cory Klippsten was removed from his role at 2040 Energy, and Proton took over operational and administrative control of the mining operations. Swan has described these events as a “hostile takeover” orchestrated by Tether.

Tether Responds

Tether has firmly denied Swan’s allegations, asserting that its actions were in accordance with contractual agreements. In a September 2024 statement, the firm emphasized its commitment to acting in good faith throughout its dealings with Swan.

“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,” the company said.

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Legal Fallout

The fallout from the dispute extends beyond the partnership itself. Swan Bitcoin launched a separate lawsuit in November 2024 against its legal counsel, Gibson, Dunn & Crutcher, accusing the firm of malpractice. Swan claims the law firm abandoned its case against Proton after taking on Tether as a client, creating a conflict of interest and violating ethical standards.

Swan CEO Cory Klippsten described the situation as a betrayal that caused significant damage to Swan’s mining business.

Author

Steven Walgenbach

Steven's passion for cryptocurrency and blockchain technology began in 2014, inspiring him to immerse himself in the field. He notably secured a top 5 world ranking in robotics. While he initially pursued a computer science degree at the University of Texas at Arlington, he chose to pause his studies after two semesters to take a more hands-on approach in advancing cryptocurrency technology. During this period, he actively worked on multiple patents related to cryptocurrency and blockchain. Additionally, Steven has explored various areas of the financial sector, including banking and financial markets, developing prototypes such as fully autonomous trading bots and intuitive interfaces that streamline blockchain integration, among other innovations.

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