Judge Michelle Williams Court of the U.S. District Court for the Central District of California has ordered a stay on Swan’s lawsuit against its former bitcoin mining employees and contractors.
The order also vacated the defendants’ motion to move the case to arbitration.
“… the Court GRANTS the Individual Defendants’ ex parte application to stay, and SUA SPONTE STAYS the case as to Proton pending the Individual Defendants’ appeal of the Order. The Court further MOOTS the Individual Defendants’ motion to stay and Proton’s motion to stay, and VACATES Proton’s motion to compel arbitration,” a court order obtained by Blockspace reads.
The defendants filed a motion for the stay in April 2025, citing precedent in Coinbase, Inc. v. Bielski. With the stay is granted, the U.S. District Court for the Central District of California will pause the case while the Ninth Circuit Court reviews the defendants’ appeal to move the case to arbitration, an appeal which the California court denied earlier this year.
“The Court further finds that judicial efficiency weighs in favor of a stay, as the Coinbase stay creates a practical dilemma where judicial resources may be wasted considering the substantial overlap between operative facts, witnesses, and legal issues, which threatens duplicative discovery and conflicting rulings,” the order reads.
Swan filed the lawsuit in September of last year, alleging that the defendants and their new company, Proton Management, stole proprietary information from Swan’s bitcoin mining joint venture with stablecoin juggernaut Tether. The defendants parted from Swan in August 2024 to found the new company, Proton Management, and entered into a business agreement with Tether to manage its mining assets.
In February 2025, the defendants appealed the court to dismiss the case for lack of jurisdiction, move the case to arbitration, or stay the case. The court denied the appeals, except for allowing Swan’s claim of conversion – for the defendants’ alleged unlawful holding of Swan property – to move to arbitration.
Tether filed its own lawsuit against Swan in U.K. court in January of this year.
According to court documents, Swan and Tether established their joint venture, 2040 Energy, in June 2023, and Tether poured $408 million into the venture, apparently footing the entire bill for the operation. Per a shareholder agreement referenced in court documents, Tether owned 80% of the venture to Swan’s own. In a July 2024 Swan shareholder letter following layoffs of 45% of the exchange’s staff, Swan revealed it was not entitled to revenue from the operation until Tether recouped its invested capital.
A Swan investor deck from the summer of 2024 claimed that 2040 Energy booked $84 million in revenue for the first half of 2024, while Swan’s exchange business brought in $6 million in 2023 and was estimated to earn $13 million in 2024.
Court documents reveal that the 2040 Energy joint venture soured in the summer of 2024. With the latest order, the court will pause proceedings for Swan’s lawsuit for the time being.
Swan declined Blockspace’s request for comment, and the legal counsel for Proton Management and its employees declined to comment.
Update May 28, 2025 (7:35 EST): Added paragraph with context on Coinbase, Inc. v. Bielski. and the Ninth Circuit Court’s review of the defendants’ appeal for arbitration.
