Tether accuses crypto platform Swan Bitcoin of breaching agreements while running a mining company

What’s new? Tether, which issues the largest USDT stablecoin with a capitalization of $137,2 billion, has filed a lawsuit against California-based digital asset management platform Swan Bitcoin. Tether explained that Swan Bitcoin has repeatedly violated agreements, and the lawsuit is designed to protect the company’s investments. The subject of the dispute was the mining company 2040 Energy, jointly launched by the parties in 2022.

Material by Cointelegraph

What else is known? Under the partnership, Tether provided funding while Swan Bitcoin handled operations. Last October, Swan Bitcoin alleged that former employees of its mining division stole confidential information, including program code and business strategies, to create a rival company, Proton Management.

Swan Bitcoin filed a lawsuit against Proton Management alleging an attempted business takeover. The defendants, however, stated that Swan Bitcoin does not have its own cryptocurrency mining business, and this activity is conducted through a separate entity, 2040 Energy, which is fully funded by Tether. In addition, both Proton Management and Swan Bitcoin own minority stakes in 2040 Energy.

According to Proton, the creation of the new firm was aimed at increasing the value of its own stake in 2040 Energy. This was necessary due to the dire financial situation of Swan Bitcoin, which was the result of its ineffective development strategy.

Tether’s General Counsel quits amid MiCA law coming into force

The European Union’s Markets in Crypto-Assets law introduces new requirements for issuers of stablecoins

Read more

For its part, Swan Bitcoin’s management considers these actions an attack on the company’s role in the joint venture with Tether, which has caused irreparable damage to its competitiveness.

It claims that key employees, including former head of business development Michael Holmes and former chief investment and mining officer Raphael Zagury, who is now CEO of Proton, are behind the attack. Swan also claimed that the plan was facilitated by Tether.

Thus, according to court documents, Proton executives allegedly convinced Tether to sever ties with Swan Bitcoin to run 2040 Energy instead.

On August 12, 2024, Swan Bitcoin CEO Cory Klippsten was removed as CEO of 2040 Energy, and Proton officially took over the operational and administrative functions associated with bitcoin mining.

As for Tether, it has filed a lawsuit in the High Court of England and Wales. The company denies any wrongdoing, claiming that it acted in accordance with its contractual rights under the joint venture agreement.