Tether, the leading issuer in the stablecoin sector, has initiated legal proceedings against Swan Bitcoin in the High Court of England and Wales, according to a Jan. 15 statement shared with CryptoSlate.
The stablecoin company claimed that Swan had significantly breached their agreements, prompting the lawsuit to safeguard its investment.
Tether stated:
“Swan has acted recklessly and their actions have resulted in significant breaches by them of the agreements between us. Consequently, we have been compelled to take necessary measures to protect our investment.”
The Paolo Ardoino-led firm said it initiated the legal action alongside co-claimant 2040 Energy Limited.
In response to the FUD surrounding the lawsuit, Swan Bitcoin CEO Cory Klippsten said the firm was “doing great and growing fast.”
Tether is the issuer of USDT, the largest stablecoin by market capitalization, while Swan Bitcoin is a financial services company focused on the top digital asset.
A short-lived relationship
The partnership between Tether and Swan Bitcoin began last May when the stablecoin issuer expanded into Bitcoin mining by leveraging Swan’s Managed Bitcoin Mining service. Tether reportedly allocated substantial resources to establish its mining operations through this collaboration.
However, by July, the relationship unraveled after Swan Bitcoin abruptly ended its managed mining business and suspended its Initial Public Offering (IPO) plans without providing clear reasons.
Swan’s operations faced turmoil in the following months, including a lawsuit against former employees and consultants.
The Bitcoin-focused company reportedly alleged that these individuals conspired to misappropriate trade secrets, including proprietary code and financial models, to form a competing mining operation, Proton Management.
According to Swan, Tether’s advisor, Zach Lyons, played a key role in the fallout. Lyons allegedly encouraged employees to leave Swan, undermined its leadership, and facilitated the creation of Proton Management.
Swan claimed these actions led to the collapse of its managed mining unit, the cancellation of its IPO plans, and significant layoffs. Additionally, Tether’s promised $25 million funding failed to materialize, compounding the firm’s financial troubles.
While Tether is not a defendant in Swan’s lawsuit against former employees, the stablecoin issuer has denied wrongdoing. So, its recent lawsuit marks a further escalation in the conflict and highlights the strained relationship between the two firms.
Blockspace Media first reported the story.