Swan Bitcoin sues former employees for stealing trade secrets to launch rival mining firm

Swan Bitcoin has filed a lawsuit against some of the mining startup’s former employees for allegedly stealing proprietary software and trade secrets to found a rival firm, Proton Management.

In the lawsuit filed Sept. 25 in Los Angeles federal court, Swan alleged that six of his former employees conspired to “undermine Swan’s ability to compete in the marketplace” by stealing what were called the “crown jewels” from the mining business.

Founded in 2019, Swan Bitcoin offers financial services to investors and pivoted to the mining industry after launching Swan Mining in 2023. The complaint alleges that the defendants executed a premeditated plan called “rain and hellfire” to take over Swan’s mining business. inside.

According to Swan, the former employees stole the proprietary code of mining monitoring software and thousands of confidential documents before resigning between August 8 and August 9.

Additionally, the defendants are accused of soliciting key personnel and securing Swan’s business partners, including stablecoin issuer Tether. The complaint stated that the company behind USDT specifically aimed to provide “legal cover” for the crimes of the “copycat company”.

Tether, a key financing partner, replaced Swan with Proton in the mining deal on August 12, just days after the defendants resigned.

The duo also launched a managed mining service for institutional investors, aiming to increase its capacity to 100 exahash by 2026. The latest lawsuit could impact the future of those plans.

The complaint also reveals that Swan is struggling with revenue issues in its mining division. Swan’s CEO, Cory Klippsten, told the community in July that the company might shut down its managed mining service. Around the same time, Swan was reportedly considering selling its mining business to Tether.

Swan argues that the stolen information helped Proton gain an unfair advantage in the competitive Bitcoin mining market.

The firm claims to have evidence of the theft and subsequent cover-up attempts. He is suing to protect his rights, accusing the defendants of trade secret misappropriation, breach of contract, and aiding and abetting breach of duty of loyalty.

Swan requested a jury trial to determine damages and asked the court to return the stolen equipment and the classified material in question, as well as seek permanent injunction.

Core business not affected

Despite the legal battle, Klippsten reassured the community that the financial services firm had a profitable year with 132% year-on-year revenue growth, and explained that the recent news did not impact its core business as its mining arm was launched. “separate and separated.”

Swan’s revenue growth follows new product launches, including the launch of Bitcoin Individual Retirement Accounts in partnership with Equity Trust Company, a US-based self-directed IRA provider. The offering allows Swan clients to manage Bitcoin in tax-advantaged retirement accounts.