Trouble For Swan Bitcoin: Drags Former Employees To Court

Swan Bitcoin is a company specialising in cryptocurrencies that, as its name suggests, deals mainly in BTC. Its diverse financial services are all, or almost all, related in some way to the kingdom of crypto. Particularly active has always been its mining department, which has now become the focus of a scandal with unpleasant legal implications.

Some former Bitcoin mining employees are said to have secretly stolen several company secrets, including the entire software code that managed and coordinated the mining. After doing so, they allegedly resigned and started their own competing business using the misappropriated know-how.

Swan Bitcoin versus Proton Management

The former employees of Swan Bitcoin allegedly planned everything well in advance. Once they got hold of the source code, they founded a company that they call a counterfeit company at Swan, since it opposes the parent company's business in a bogus way, using the same method and tools, but not sharing the proceeds with it.

What appears even more serious, in the eyes of Swan Bitcoin's management, is Proton's attempt to irreparably damage the parent company's ability to compete in the market, by entering into fraudulent agreements with Tether, the stablecoin issuer that has been Swan's partner from the outset, as well as its main financier. The dossier filed in court on 25 September, and on the basis of which the lawsuit will be based, reads:

"At Proton, they hatched a plan to take over Swan Bitcoin's mining business from the inside. They wanted to usurp its throne and oust it from its joint venture with Tether. They wanted to purloin the crown jewels of Swan's Bitcoin mining business."

Besides the colourful language, if the court proves that the company from which the employees walked out is indeed right, we would be dealing with a real hostile operation.

Accusations open in the dossier

The prosecution clearly points the finger at the alleged perpetrators of the manoeuvre. The main proponent of the operation would be Michael Holmes, who was responsible for business development at Swan Bitcoin. At his side would be Proton's newly appointed CEO: Raphael Zagury, former head of mining and investments. In short, the leavers would be two key figures at Swan, a company whose CEO, Cory Klippsten, received the two letters of resignation a day apart, between 8 and 9 August. On 12 August, Tether informed Klippsten that it would stop funding Swan in order to enter into a partnership with Proton.

Will this be the end for Swan Bitcoin?

Swan's mining service is particularly attractive. The company relaunched its segment last May, dedicated mainly to institutional investors and financed mostly by Tether. The goal of the two was to reach 100 exahash of computing power by 2026. Yet the company failed to live up to its ambition and Klippsten himself announced in July that the managed mining business would soon be divested. The intention was to sell it entirely to Tether. Although the stable producer had the means to take it forward, he had no intention of running it himself, preferring to continue concentrating on his lucrative core business.

At this point, Holmes and Zagury allegedly decided to make their move, deputizing Swan Bitcoin and replacing it in the dialogue with Tether, convincing it that it was capable of handling the mining in Proton. The process has done great damage to Klippsten's company, which, if it were to emerge from the process defeated, would probably find it very difficult to remain profitable. The CEO plays it down, but not many believe him.

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