Proton says Swan Bitcoin lawsuit is ‘fatally flawed,’ seeks dismissal

The Bitcoin mining firm accused by Swan Bitcoin of stealing its mining business through a “rain and hellfire” plan has denied the allegations, and is calling for the case to be dismissed.

In a Sept. 30 motion to dismiss, Proton Management said accusations made by Swan are “fatally flawed” because it “does not have a mining business” to begin with.

Proton said the Bitcoin mining business, 2040 Energy, was a separate entity fully funded by stablecoin issuer Tether, stating:

“Swan’s filings appear to be nothing more than ‘litigation by ambush’ to disparage its former employees and contractors in order to gain leverage in its dispute with Tether.”

Proton also refuted accusations that it used Swan’s proprietary information or trade secrets.

“It is highly questionable whether any of the information identified in Swan’s complaint actually belongs to Swan as opposed to 2040 Energy,” Proton added.

Proton was founded at a time when Swan’s financial position was so “precarious” that it had to conduct a large round of layoffs in July 2024, Proton said.

Previous reporting shows that Swan also announced plans to shut down its managed mining business with Tether around this time.

Proton acknowledged Swan has a “minority” stake in 2040 Energy — before claiming it is actually helping Swan by preserving and possibly even enhancing its value.

Proton further argued that Swan’s ex parte applications should be denied because the California court it filed lacks personal jurisdiction over Proton, which is incorporated in the British Virgin Islands.

Cointelegraph reached out to Swan for comment but didn’t receive an immediate response.

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Swan first launched a lawsuit against Proton on Sept. 25.

The lawsuit pointed the finger at Swan’s former Head of Business Development, Michael Holmes, as Proton’s “ringleader,” while its former chief investment officer and mining head, Raphael Zagury, is Proton’s CEO. 

Klippsten’s firm said it was “blindsided” by a spree of resignation letters in August, noting many of those who resigned now work at Proton. 

However, the same ex-Swan employees say the resignations were due to Swan’s “mismanagement” — which they claim negatively impacted 2040 Energy’s operations and future growth.

Swan is seeking a permanent injunction against Proton to prevent it from further disrupting Swan’s Bitcoin mining business and is also asking the court to compel its ex-employees to return stolen equipment and “confidential material.”

Swan asked the court for a jury trial and for damages to be determined at trial.

Magazine: Chinese Tether laundromat, Bhutan enjoys recent Bitcoin boost: Asia Express