Prime Trust's post-bankruptcy litigation trust has filed suit against Swan Bitcoin in Delaware bankruptcy court, alleging the Bitcoin services company exploited insider knowledge to withdraw nearly $1 billion in assets from the custodian in the days before its August 2023 collapse. The complaint accuses Electric Solidus, the corporate entity behind Swan, of receiving over $24.6 million in cash, 11,994 Bitcoin (currently valued around $923 million), approximately 5 million USDT, and smaller amounts of other digital assets before Prime Trust filed for bankruptcy. At the center of the allegations is an unnamed Prime Trust senior executive who maintained a paid advisory arrangement with Swan dating back to July 2019 while simultaneously employed at 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, with the trust alleging Swan used insider access to move funds ahead of other customers as Prime Trust's financial condition deteriorated.
## Timeline of Alleged Events
According to the complaint, on May 22, 2023—four days before Prime Trust met with Nevada regulators on May 26—the unnamed executive allegedly opened an encrypted chat with Swan CEO Cory Klippsten and configured messages to auto-delete every 24 hours. The auto-delete feature was allegedly disabled the day after the regulatory meeting, when Swan withdrew more than 10,000 Bitcoin from Prime Trust.
The complaint further alleges that Swan abruptly expanded a partial asset transfer into a complete evacuation of all funds one day before the Nevada regulatory meeting. Prime Trust staff scrambled to comply before the close of business that day, according to Slack communications cited in the filing.
## Account Creation Allegations
On May 25, Prime Trust allegedly created an internal ledger labeled "PT FBO Swan Customers"—an account that did not previously exist—to make it appear Swan's funds had always been held in a separate trust, which would have made them harder to claw back in bankruptcy proceedings. "In substance, however, those assets had not been and were not held in trust for the benefit of Swan's customers," the suit claims.
The complaint states: "Swan knew to transfer fiat and crypto from Prime immediately prior to Prime filing for bankruptcy to avoid catastrophic losses."
## Legal Claims and Remedies
The plaintiff is seeking recovery under preferential transfer and actual fraudulent transfer provisions of the Bankruptcy Code. The trust is also asking the court to disallow any future claims Swan might assert against the estate until restitution is made.
Cointelegraph reached out to Swan for comment, but did not receive an immediate response at the time of reporting.
