Swan Bitcoin has initiated legal proceedings against its former employees. It is now accusing its law firm of misconduct for accepting the stablecoin issuer as a client, having received assistance from Tether, it alleges.
In response to the appointment of an attorney who represents Tether, a competitor cryptocurrency business and stablecoin issuer, Swan Bitcoin, a provider of financial services, has initiated legal action against the law firm it continues to use, Gibson, Dunn & Crutcher.
In California’s Superior Court, Swan filed a lawsuit against Gibson on November 22, alleging it of legal malpractice. Swan alleged that Gibson “wooed and persuaded Swan” to represent it against “former-partner-turned-adversary” Tether before the law firm “embraced Tether as a client and told Swan to get lost.”
Swan claimed that one of Gibson’s attorneys contacted its CEO, Cory Klippsten, to suggest that Swan should seek additional legal counsel. This was due to the fact that the law firm had appointed Barry Berke, a Tether counsel, which raised the possibility of a conflict of interest.
Gibson was Swan’s legal counsel when it filed a lawsuit against a group of its former employees in September. The claim in the lawsuit was that the employees had procured software code to establish a crypto-mining company, Proton Management.
Swan alleged that Proton had convinced Tether to abandon Swan and support Proton instead, allegations that Proton denied.
Gibson filed to withdraw as Swan’s attorneys in its litigation against Proton on November 24, claiming that “the attorney-client relationship has been utterly fractured.”
Swan’s litigation against the law firm was cited, and it was alleged that Swan informed the firm that it would “never” pay the legal fees it owed and that it “demanded millions of dollars” in exchange for Gibson’s withdrawal from the lawsuit.
On November 25, Swan asked the Superior Court of California for a temporary restraining order to stop Gibson from dropping its case against Proton and taking on Tether as a client.
The charge was that Gibson was “obviously violating the ‘Hot Potato’ Rule in attorney ethics,” which is a legal principle that prohibits lawyers from withdrawing from a case in order to prevent a conflict of interest by abandoning a client. November 26 is the date of the restraining order hearing.
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