Tether has failed in a legal attempt to stop a former business partner from pursuing a lawsuit in California, in a dispute over a joint bitcoin mining venture which acrimoniously fell apart last year.
A judge at the high court in London on Wednesday rejected Tether’s attempt to secure an interim anti-suit injunction against Swan Bitcoin, to stop its rival continuing with a case against six former employees.
El Salvador-based Tether, one of the world’s largest cryptocurrency operators, had argued that its former partner Swan could obtain proprietary information through disclosures in the California case, and use it for commercial gain.
Tether runs the USDT stablecoin, a privately run digital dollar that has become the de facto reserve currency for crypto, and said it made $13bn in net profits last year, nearly double that of asset manager BlackRock. The company makes money by holding US Treasuries which it says back its token. High US interest rates have pushed its earnings higher, although its results are unaudited.
The pair of ongoing lawsuits lift the lid on some of Tether’s business dealings. The stablecoin operator has ploughed some of its profits into new crypto ventures and beyond — it bought an 8 per cent stake in Italian football club Juventus earlier this month.
Tether sued crypto group Swan Bitcoin in January, alleging contract breaches by its partner.
The venture, named 2040 Energy, was set up in June 2023 to pursue bitcoin mining investments in Tasmania, Norway, Texas and other places, according to court records.
Tether owned roughly 80 per cent of the shares, and Swan around 20 per cent, barrister Stephen Houseman KC, acting for Tether, told the court.
But last year the mining group faced “cash flow issues” and the relationship between Swan and Tether deteriorated over the company’s valuation.
“This relationship has exploded. This is a very messy divorce,” Houseman told the court during a two-day hearing. The companies’ relationship “has broken down so severely”, said Houseman, adding that “information will be received . . . [that they] just shouldn’t have.”
However, the judge rejected Tether’s argument. “I don’t consider it likely on the basis of the evidence that I’ve had given to me so far that the defendant will find it easy to exploit commercially any information that it already has in its possession, let alone any information that it does not yet possess but it might gain from disclosures in California,” said Justice Bright.
“There is nothing nefarious about what we are doing,” said barrister Edward Levey, acting for Swan.
The companies’ partnership deteriorated after Tether declined to put more money into the company and found out that Swan had instead raised money from crypto group Ripple without its knowledge, Tether alleged.
The head of 2040 energy and several Swan employees and consultants resigned in August. Swan said its relationship with Tether deteriorated “for reasons that are in dispute”.
Swan filed a separate lawsuit against the former employees in the US late last year alleging that several former employees “devised and executed a brazen plan”, a “rain and hellfire” plan in which they “stole trade secrets and other proprietary materials”.
Swan alleged the former employees joined a “copycat company” called Proton Management, in order to unlawfully “usurp” Swan’s bitcoin mining business.
Tether is not named as a defendant in the US lawsuit, but “allegedly conspired” with Swan’s former consultants to use the new company instead, according to court documents.
Tether did not immediately respond to a request for comment.
