Swan Bitcoin accuses law firm of conflict over Tether ties

Swan Bitcoin has filed a lawsuit against its legal counsel, Gibson, Dunn & Crutcher, alleging malpractice and conflicts of interest after the firm took on Tether (CRYPTO:USDT), a rival crypto entity, as a client.

The lawsuit, filed in California’s Superior Court on November 22, stems from Gibson hiring Barry Berke, an attorney representing Tether, while still representing Swan in ongoing legal matters.

According to the complaint, Gibson initially represented Swan in a lawsuit against former employees accused of stealing software code to form Proton Management, a crypto-mining company allegedly backed by Tether.

Swan alleges that Proton persuaded Tether to sever ties with Swan in favor of Proton, though Tether is not a defendant in the lawsuit.

Swan claims it was abruptly informed by Gibson that it would need to find alternative legal representation due to potential conflicts arising from the firm’s new association with Tether.

Swan CEO Cory Klippsten reportedly received a warning call from Gibson indicating this shift.

On November 24, Gibson filed to withdraw as Swan's counsel in the case against Proton, citing a breakdown in the attorney-client relationship.

The law firm claimed Swan refused to pay its legal fees and demanded millions of dollars not to oppose the withdrawal.

In response, Swan sought a temporary restraining order on November 25 to prevent Gibson from withdrawing from the case and taking on Tether as a client.

Swan argues this violates the “Hot Potato” Rule, which prohibits lawyers from dropping a client to avoid a conflict of interest.

A court hearing on the restraining order is scheduled for November 26, marking the latest development in the contentious dispute.

Swan has accused Gibson of abandoning its obligations for financial gain, intensifying the legal battle surrounding these allegations.

At the time of reporting, the Tether (USDT) price was $1.00.