Former Swan employees are accused of corporate espionage for obtaining software and data in order to establish a competing company.
Swan Bitcoin initiated legal proceedings against Proton Management, a competitor, and numerous former employees this week. The company accused them of a deliberate endeavor to undermine and acquire its Bitcoin mining operations.
People who were previously trusted with secret information about Swan’s software and business contacts are allegedly betraying him, according to this continuing court battle in the US District Court for the Central District of California.
According to the allegations, Swan was allegedly sabotaged from within by former employees, which is indicative of corporate espionage. Allegedly, they seized customer data and critical software code. They employed this information to establish a new company, Proton Management, following their resignation. Their objective was to engage in direct competition with their former employer.
CEO Cory Klippsten of Swan stated on X that the company’s mining operations have always been “separate and segregated.” He also stated that Swan’s primary operation is not affected by the most recent news.
The lawsuit designated Michael Holmes, who was previously Swan’s Business Development Head, as the mastermind behind Proton. In the interim, Raphael Zagury, who previously served as Swan’s CIO and mining chief, has assumed the position of CEO at Proton.
In addition, the complaint alleges that Proton employees recruited personnel from Swan’s mining team and redirected Swan’s financial supporter, Tether, to fund their own operations.
A sudden influx of resignations on August 8 and 9 caught Swan off surprise. On August 12, Tether allegedly informed the company that Proton would be assuming its role in the mining agreement, which resulted in another surprise.
In addition, Swan contends that this malfeasance not only violates contractual confidentiality but also causes immediate and irreversible harm to its operations, which could result in the loss of business opportunities and a tarnished reputation. The legal complaint implies that the former employees, in conjunction with Tether, intended to dismantle Swan’s mining business from the inside out.
Swan has submitted a request for the recovery of misappropriated materials and a permanent injunction against Proton. The resolution of this litigation has the potential to establish a precedent for the management of intellectual property disputes in the cryptocurrency sector.
In May 2024, Swan Bitcoin initiated its managed mining service for institutional investors in partnership with Tether. The company’s objective is to achieve 100 exahashes by 2026. Nevertheless, CEO Cory Klippsten declared in July that the managed mining operation was likely to cease operations as a result of the company’s inability to immediately generate sufficient revenue. Simultaneously, the organization implemented workforce reductions and declined to disclose securities.
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