Prime Trust sues Swan Bitcoin over nearly $1B withdrawals
Prime Trust’s litigation trust sued Swan Bitcoin, alleging nearly $1 billion in assets — 11,994 BTC, $24.6M cash and about 5M USDT — were withdrawn days before its August 2023 bankruptcy.
The post-bankruptcy litigation trust for Prime Trust has filed suit in Delaware bankruptcy court against Swan Bitcoin, alleging the company used insider access to withdraw nearly $1 billion in assets days before Prime Trust filed for bankruptcy in August 2023.
The complaint names Electric Solidus as the corporate entity behind Swan and says the transfers included 11,994 Bitcoin, about $24.6 million in cash and roughly 5 million USDT, plus smaller amounts of other digital assets. The filing values the Bitcoin at about $923 million based on current prices in the complaint.
The litigation trust alleges the transfers took place as Prime Trust’s financial condition worsened and before other customers could move funds. The complaint says an unnamed senior Prime Trust executive, who was also a paid adviser to Swan under an arrangement dating to July 2019, coordinated with Swan leadership.
Four days before a May 26, 2023 meeting between Prime Trust and Nevada regulators, the executive opened an encrypted chat with Swan CEO Cory Klippsten and set messages to auto-delete every 24 hours, according to the filing. The complaint asserts the auto-delete feature was turned off the day after the meeting, and that Swan then withdrew more than 10,000 Bitcoin from Prime Trust.
The suit alleges Swan escalated a partial transfer request into a full withdrawal one day before the regulator meeting, and that Prime Trust staff rushed to comply before the close of business. The complaint says Prime Trust created an internal ledger labeled “PT FBO Swan Customers” on May 25 — an account the filing says did not previously exist — and that those assets were not held in trust for Swan’s customers.
The litigation trust is seeking to recover the transfers under preferential transfer and actual fraudulent transfer provisions of the U.S. Bankruptcy Code. The complaint also asks the court to disallow any future claims Swan might assert against the Prime Trust estate until restitution is made.
The complaint includes the statement: “Swan knew to transfer fiat and crypto from Prime immediately prior to Prime filing for bankruptcy to avoid catastrophic losses.” The litigation will proceed in Delaware bankruptcy court as the trust pursues clawback claims while it resolves Prime Trust’s bankruptcy estate.
Swan did not immediately respond to requests for comment.
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