Tether, a prominent stablecoin issuer, has filed a lawsuit against Bitcoin financial services company Swan Bitcoin, accusing the firm of breaching their contractual agreements in a joint Bitcoin mining venture.
The legal action, confirmed by Tether and co-claimant 2040 Energy on January 15, 2025, marks an escalation in a contentious dispute between the two companies.
The joint Bitcoin mining venture in contention
The joint venture, 2040 Energy, was established in 2022 with Tether providing funding and Swan Bitcoin overseeing operations.
However, Tether alleges that Swan’s reckless actions have resulted in significant contractual violations, prompting the lawsuit filed in the High Court of England and Wales.
“Throughout our relationship with Swan, Tether has consistently acted in good faith,” the company stated.
“Conversely, Swan has acted recklessly, leading to significant breaches of our agreements.”
The disagreement traces its roots to allegations of internal misconduct within Swan’s mining division.
According to Swan, former employees stole proprietary information, including software code and business strategies, to establish a rival company, Proton Management, incorporated in the British Virgin Islands.
Swan sued the key figures involved in this alleged misconduct including Michael Holmes, Swan’s former head of business development, and Raphael Zagury, the company’s ex-chief investment officer and mining head.
The individuals are now affiliated with Proton Management, with Zagury serving as the CEO.
Swan Bitcoin claims that Proton Management used the stolen trade secrets to compete directly in the Bitcoin mining sector, significantly undermining Swan’s market position.
The company further alleged that Proton conspired to convince Tether to terminate its partnership with Swan and back Proton’s operations instead.
On August 12, 2024, Cory Klippsten, Swan’s CEO, was removed as the CEO of 2040 Energy, and Proton subsequently assumed control of the mining operations.
In response, Tether has denied any wrongdoing, asserting that it acted within its contractual rights.
“While Tether is aware of recent allegations, we have adhered to our agreements and categorically deny any implications of misconduct,” the company stated in September 2024.
Swan Bitcoin has sued its law firm for representing Tether
Adding to its legal challenges, Swan Bitcoin has also initiated a lawsuit against its law firm, Gibson, Dunn & Crutcher.
Swan accused the firm of malpractice, claiming it abandoned Swan’s case against Proton after taking Tether on as a client, which Swan argues constitutes a severe conflict of interest.
Swan’s CEO has criticized Gibson’s actions, describing them as a betrayal that inflicted substantial damage on Swan’s business.
The unfolding legal battle between Tether and Swan Bitcoin underscores the complexities of partnerships in the rapidly evolving cryptocurrency industry.
As the case progresses, it is likely to have significant implications for joint ventures and governance in the Bitcoin mining sector.
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