The post-bankruptcy trust for Prime Trust has filed suit against Swan Bitcoin, alleging the Bitcoin services company exploited insider knowledge to pull nearly $1 billion in assets from the custodian days before its collapse.
The complaint, filed in Delaware bankruptcy court, accuses Electric Solidus, the corporate entity behind Swan, of receiving over $24.6 million in cash, 11,994 Bitcoin currently worth around $923 million, roughly 5 million USDT, and smaller amounts of other digital assets before Prime Trust's August 2023 bankruptcy.
At the center of the allegations is an unidentified Prime Trust senior executive who, while working at the company, was also a paid adviser to Swan through a side arrangement dating back to July 2019.
Four days before Prime Trust met with Nevada regulators on May 26, 2023, the executive allegedly opened an encrypted chat with Swan CEO Cory Klippsten and set messages to auto-delete every 24 hours. The feature was allegedly turned off the day after the meeting, when Swan withdrew more than 10,000 Bitcoin from Prime Trust.
The lawsuit is part of a broader effort by Prime Trust’s post-bankruptcy litigation trust to recover assets transferred out of the custodian in the weeks leading up to its collapse. The trust alleges Swan used insider access to move funds ahead of other customers as Prime Trust’s financial condition deteriorated.
Swan allegedly abruptly expanded a partial asset transfer into a full evacuation of all funds, one day before the Nevada meeting. Prime Trust staff scrambled to comply before the close of business that day, according to Slack communications cited in the filing.
The complaint further alleges Prime created an internal ledger labeled “PT FBO Swan Customers” on May 25, an account that did not previously exist, to make it appear Swan’s funds had always been held in a separate trust. The plaintiff is seeking recovery under preferential transfer and actual fraudulent transfer provisions of the Bankruptcy Code.