According to Cointelegraph, Swan Bitcoin has initiated legal action against the law firm Gibson, Dunn & Crutcher, which it still retains, following the firm's decision to hire a lawyer representing Tether, a stablecoin issuer and rival crypto company. The lawsuit, filed in California’s Superior Court on November 22, accuses Gibson of legal malpractice. Swan alleges that the law firm initially agreed to represent it against Tether, a former partner turned adversary, but later embraced Tether as a client, advising Swan to seek alternative legal counsel.
The conflict arose when one of Gibson’s lawyers reportedly contacted Swan's CEO, Cory Klippsten, to inform him that the firm needed to find new representation. This was due to the hiring of lawyer Barry Berke, who represents Tether, creating a potential conflict of interest. Previously, with Gibson as its legal counsel, Swan had filed a lawsuit in September against a group of former employees, accusing them of stealing software code to establish a crypto-mining company named Proton Management. Swan claims that Proton persuaded Tether to sever ties with Swan in favor of supporting Proton, allegations that Proton denies. Notably, Tether is not named as a defendant in Swan’s lawsuit.
On November 24, Gibson filed a motion to withdraw as Swan’s legal representatives in the case against Proton, citing a complete breakdown of the attorney-client relationship. The firm claimed that Swan had expressed intentions to never pay the legal fees owed and demanded millions of dollars to not oppose Gibson's withdrawal from the lawsuit. In response, on November 25, Swan requested a temporary restraining order from the Superior Court of California to prevent Gibson from withdrawing from the Proton case and to block the firm from representing Tether.
Swan's complaint argues that Gibson is violating the 'Hot Potato' Rule in attorney ethics, which prohibits lawyers from dropping a client to avoid a conflict of interest. A hearing for the restraining order is scheduled for November 26.