Swan Bitcoin and Proton Management at Odds Over Mining Business Allegations

TLDR

• Proton Management denies Swan Bitcoin’s lawsuit allegations
• Proton claims 2040 Energy is a separate entity funded by Tether
• Swan accused ex-employees of stealing its mining business
• Proton argues Swan doesn’t have a mining business to steal
• Proton seeks dismissal, citing lack of court jurisdiction

Proton Management, a Bitcoin mining firm, has firmly denied allegations made by Swan Bitcoin in a recent lawsuit.

The dispute centers around Swan’s claims that Proton, led by former Swan employees, stole its mining business. However, Proton argues that these accusations are baseless and is now calling for the case to be dismissed.

On September 30, Proton filed a motion to dismiss the lawsuit, stating that Swan’s claims are “fatally flawed.”

The core of Proton’s argument is that Swan “does not have a mining business” to begin with, making the theft allegations impossible.

Proton asserts that the Bitcoin mining business in question, 2040 Energy, is actually a separate entity that was fully funded by Tether, the stablecoin issuer.

Proton’s response characterizes Swan’s legal action as “litigation by ambush,” suggesting that Swan’s real motive is to disparage its former employees and gain leverage in a separate dispute with Tether.

This statement hints at a complex web of relationships and conflicts within the cryptocurrency industry.

The motion to dismiss also addresses Swan’s claims about stolen proprietary information and trade secrets.

Proton questions whether any of the information mentioned in Swan’s complaint actually belongs to Swan, suggesting it may instead be the property of 2040 Energy.

Providing context for the dispute, Proton points out that Swan’s financial situation was “precarious” around the time Proton was founded.

This claim is supported by reports of Swan conducting significant layoffs in July 2024 and announcing plans to shut down its managed mining business with Tether.

Interestingly, Proton acknowledges that Swan holds a minority stake in 2040 Energy. However, Proton argues that its actions are actually beneficial to Swan, potentially preserving or even increasing the value of this stake.

The legal battle between the two companies began on September 25, when Swan filed its lawsuit. Swan’s complaint named Michael Holmes, its former Head of Business Development, as Proton’s “ringleader.”

It also identified Raphael Zagury, Swan’s ex-chief investment officer and mining head, as Proton’s CEO.

Swan claims it was caught off guard by a wave of resignation letters in August, with many of the departing employees now working at Proton.

However, these former Swan employees counter that their resignations were prompted by Swan’s “mismanagement,” which they allege negatively impacted 2040 Energy’s operations and growth prospects.

In its lawsuit, Swan is seeking several remedies. These include a permanent injunction against Proton to prevent further disruption of Swan’s Bitcoin mining business.

Swan is also asking the court to compel its former employees to return what it claims is stolen equipment and confidential material. Additionally, Swan has requested a jury trial and is seeking damages to be determined during the trial.

Proton’s motion to dismiss also raises a jurisdictional issue. The company argues that the California court where Swan filed the lawsuit lacks personal jurisdiction over Proton, which is incorporated in the British Virgin Islands.

This legal technicality could potentially impact the case’s progression.

As of now, Swan has not publicly responded to Proton’s motion to dismiss. The cryptocurrency community is watching this case closely, as its outcome could have implications for how disputes between companies and former employees are handled in the rapidly evolving digital asset industry.