The dispute between the two companies escalated after Swan previously accused former employees of stealing proprietary information to start a rival firm, Proton Management, and alleged Tether facilitated a hostile takeover. Meanwhile, Burwick Law is preparing legal action against Solana-based launchpad Pump.fun for enabling scams and harmful activities on the platform, which led to serious financial losses for investors. Meanwhile, BitMEX and its parent company HDR Global Trading were fined $100 million for Bank Secrecy Act violations, bringing an end to years of legal battles with US authorities.
Tether and Swan Bitcoin Clash
Tether, the issuer of the popular USDT stablecoin, filed a lawsuit against Swan Bitcoin, and accused the Bitcoin financial services company of breaches in their agreements. In a joint statement with 2040 Energy, Tether confirmed the legal action, and stated that Swan’s reckless actions violated their contractual obligations. This case was filed in the High Court of England and Wales, and is the latest escalation in the legal battle between the two firms.
The dispute started from a partnership that was established in 2022, where Tether and Swan co-founded 2040 Energy, a Bitcoin mining venture. Tether provided funding while Swan managed operations.
However, Swan alleged that former employees of its mining division stole proprietary information, including software code and business strategies, to establish a rival company, Proton Management. According to Swan, these employees executed a deliberate scheme, which is called “rain and hellfire,” and is aimed at undermining its role in the venture. Some of the key figures in this alleged plan included Michael Holmes, Swan’s former head of business development, and Raphael Zagury, its ex-chief investment officer and mining head, who now serves as Proton’s CEO.
Swan claimed that Proton used its trade secrets to become a direct competitor, severely damaging Swan’s market position. The firm also accused Proton of convincing Tether to sever ties with Swan and support Proton in the mining venture.
By August of 2024, Swan CEO Cory Klippsten was removed as CEO of 2040 Energy, and Proton officially assumed control of the mining operations. Swan also alleged that Tether facilitated the “hostile takeover” of its mining business, but Tether denies this claim.
Adding to Swan’s legal troubles, the company sued its own law firm, Gibson, Dunn & Crutcher, in November of 2024 for malpractice. Swan alleged that the firm abandoned its case against Proton after taking on Tether as a client. As a result, the law firm violated ethics rules prohibiting such conflicts of interest. Swan CEO Cory Klippsten described this move as a betrayal that caused serious harm to Swan’s business.
Burwick Law Targets Pump.fun Over Investor Losses
Burwick Law, a US-based crypto law firm, also recently announced its intention to pursue legal action on behalf of investors who suffered losses due to the meme coin launchpad Pump.fun. In a post on X from Jan. 15, the firm stated that it spent months working with people who lost large amounts of money to meme coins, rug pulls, and unfulfilled promises that were facilitated through platforms like Pump.fun. The firm described the situation as emblematic of exploitation in the crypto ecosystem, and blamed anonymous creators and other corrupt entities for taking advantage of everyday people.
According to Burwick, Pump.fun generated hundreds of millions of dollars in fees while allowing harmful and antisocial behaviors, including displays of illicit drug use, racism, and violent acts, to occur on its platform. Pump.fun is a Solana-based meme coin launchpad that allows users to create and launch their own meme coins without needing technical expertise. It attracted millions of users, but still faced criticism for its alleged role in scams and unethical activities. In fact, data from Dune analyst Adam Tehc reveals that only 0.4% of the 14 million crypto wallets interacting with Pump.fun actually achieved profits of more than $10,000.
Pump.fun previously allowed live streaming for token promotion but suspended the feature after it was misused for dangerous stunts. The platform also faced regulatory scrutiny after the UK’s Financial Conduct Authority banned access to Pump.fun in December to try and mitigate crypto-related scams. The law firm called for affected investors to join its investigation, and suggested that the potential class-action group could be in the millions.
In addition to its fight against Pump.fun, Burwick Law is pursuing separate legal actions involving other crypto-related projects. These include cases against Moonbirds and Proof Collective NFTs, as well as the Full Send Metacard NFTs promoted by the Nelk Boys, which the firm alleges misled investors with unrealistic promises of benefits.
Judge Fines BitMEX $100M Over BSA Violations
A federal judge sentenced HDR Global Trading Limited, the parent company of crypto exchange BitMEX, to two years of unsupervised probation and a $100 million fine. The ruling was delivered on Jan. 15 in the US District Court for the Southern District of New York by Judge John Koeltl, approximately six months after BitMEX pleaded guilty to violating the US Bank Secrecy Act (BSA) by failing to implement an adequate Anti-Money Laundering (AML) program.
The charges stemmed from BitMEX’s alleged lack of compliance with BSA requirements, as the platform allowed users to sign up with only an email address. This allowed people to bypass proper Know Your Customer standards.
The US government claimed that BitMEX gained $155 million unlawfully from US sources between 2015 and 2020 and asked for a $417 million fine. However, the court dismissed all open counts against the firm as part of the sentencing and imposed a much smaller financial penalty.
BitMEX statement to its users
BitMEX called the charges “old news” in a statement to its users, and shared that it is very disappointed at the additional fine, even though it is far less than what the Department of Justice initially sought over the years. The firm and its executives previously settled separate regulatory cases, including a $100 million consent payment to the US Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN) in 2021.
BitMEX co-founders Arthur Hayes, Benjamin Delo, Samuel Reed, and employee Gregory Dwyer already faced sentencing in 2022, and received probation for their roles in violating the BSA. In addition, Hayes, Delo, and Reed were ordered to pay $30 million in penalties as part of a civil settlement with the CFTC.
The recent judgment appears to bring an end to the lengthy criminal and civil cases against BitMEX and its executives, which have lasted almost four years. Arthur Hayes stepped down as CEO in 2020 and surrendered to US authorities in 2021 after allegations related to the BSA violations.
