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Swan Bitcoin Files Lawsuit Against Former Employee Over Alleged “Rain and Hellfire” Scheme to Seize Mining Business
Sep
Swan Bitcoin Files Lawsuit Against Former Employees Over Alleged Theft
Swan Bitcoin has initiated legal proceedings against multiple ex-employees of its mining division, claiming they illicitly appropriated critical software to establish a rival business.
Allegations Against Former Staff
The lawsuit asserts that the former employees created a competing entity named Proton Management. This group is accused of persuading one of Swan’s funding partners, Tether, to sever ties with Swan and collaborate with their new venture.
The “Rain and Hellfire” Scheme
Legal documents filed on September 25 detail the contention that these individuals plotted to undermine Swan’s market position significantly. The lawsuit describes their actions as a calculated effort to usurp Swan’s business functions and cut Swan out from the partnership with Tether, termed as the “rain and hellfire” plan.
“They hatched a plan to steal Swan’s mining business from the inside, usurp Swan’s role, and cut Swan out from the Tether joint venture.”
Key Figures Involved
The document identifies Michael Holmes, formerly the Head of Business Development at Swan, as the primary orchestrator of Proton. Meanwhile, Raphael Zagury, who held the role of chief investment officer and led mining operations at Swan, currently serves as Proton’s CEO.
Details of the Allegations
According to the lawsuit, the duo was pivotal in executing the plan that involved the theft of Swan’s proprietary and confidential information necessary for operating a Bitcoin mining enterprise.
An unexpected wave of resignation letters was reportedly received by Swan on August 8 and 9. Shortly thereafter, on August 12, Tether notified Swan of its decision to replace Swan in their mining funding agreement.
The Response and Requests
Swan’s initial partnership with Tether aimed to offer a managed Bitcoin mining service for institutional investors, launched in May 2024, with the goal of achieving 100 exahashes of computing power by 2026. However, Swan’s CEO revealed in July that the mining business might cease operations due to challenges in generating revenue.
As a response to these developments, Swan is seeking a permanent injunction against Proton to stop further disruptions to its mining operations. The company is also requesting the court to order former employees to return any stolen equipment and confidential materials. Additionally, Swan has asked for a jury trial for damages to be assessed during the proceedings.
Conclusion
The ongoing legal battle highlights the complexities and challenges within the cryptocurrency sector, particularly concerning proprietary technologies and the stability of business relationships.