Tether has failed in an attempt to stop a former business partner from pursuing a lawsuit in the US, amid a dispute over a bitcoin mining joint 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 former partner continuing with a case in California against six former Swan employees.
El Salvador-based Tether, one of the world’s largest cryptocurrency operators, had argued 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.
Tether 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 stablecoin operator has ploughed some of its profits into new crypto ventures and other investments, including buying an 8 per cent stake in Italian football club Juventus this month.
The litigation between Tether and Swan has lifted the lid on some of Tether’s business dealings.
Tether sued Swan in the High Court in London in January, alleging contract breaches by its partner in the bitcoin mining joint venture.
The venture, named 2040 Energy, was set up in 2023 to pursue bitcoin mining investments in Tasmania, Norway, Texas and other places, Tether said in court documents.
Tether owned roughly 80 per cent of the shares in 2040 Energy, and Swan around 20 per cent, barrister Stephen Houseman KC, acting for Tether, told the court.
“This relationship has exploded. This is a very messy divorce,” Houseman said.
Last year 2040 Energy faced “cash flow issues” and the relationship between Swan and Tether deteriorated over the joint venture’s valuation, according to Tether’s court filings.
The partnership between Tether and Swan worsened after Tether declined to put more money into 2040 Energy, Tether alleged.
The head of 2040 Energy and several Swan employees and consultants resigned last August.
Houseman said the relationship between Tether and Swan “has broken down so severely”, adding that “information [through disclosure in the US lawsuit] will be received . . . [that Swan] just shouldn’t have”.
Swan said its relationship with Tether deteriorated “for reasons that are in dispute”.
“There is nothing nefarious about what we are doing,” said barrister Edward Levey KC, acting for Swan.
Justice Robert Bright rejected Tether’s request for an interim anti-suit injunction against Swan to halt its case against the six former employees in California.
“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 the judge.
Swan filed its US lawsuit against the six former employees late last year, alleging they had “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 Proton instead, according to court documents filed in California.
In a statement issued to the Financial Times after the judge’s ruling in the High Court, Tether said: “We are glad that Swan has now belatedly agreed to provide satisfactory undertakings to the court, with the result that the injunction sought was no longer required.”
It added Tether “will continue to ensure its rights are properly protected at every stage of the legal process”.
Leo Kitchen, a partner at Quinn Emanuel, representing Swan, said: “We are pleased that the court has taken the decision not to grant the injunctions sought by the claimants, which leaves the way clear for Swan to continue to pursue vindication of its rights against its former employees and consultants, and Proton, in California.”
