- Swan Bitcoin has been accused in a Delaware bankruptcy lawsuit of withdrawing major crypto holdings from Prime Trust before the custodian’s collapse.
- Court filings allege the company had access to confidential information about Prime Trust’s deteriorating financial position before bankruptcy proceedings began.
- The case centres on nearly US$1 billion in assets that creditors are seeking to recover for redistribution through the bankruptcy estate.
Bitcoin services company Swan Bitcoin is facing legal action in the US Bankruptcy Court for the District of Delaware over claims it withdrew nearly US$1 billion (AU$1.4 billion) in digital assets from Prime Trust before the crypto custodian collapsed in 2023. The lawsuit was brought by the PCT Litigation Trust, which is handling recovery efforts tied to Prime Core Technologies’ bankruptcy proceedings.
According to the complaint, Swan allegedly benefited from access to confidential information concerning Prime Trust’s financial troubles and used that knowledge to remove funds before the company entered Chapter 11 bankruptcy. The filing claims most Prime customers suffered significant losses, while Swan was able to avoid similar exposure.
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Trust Seeks Recovery of Crypto Holdings
The assets identified in the lawsuit include approximately 11,994 BTC valued at around US$938 million (AU$1.31 billion), along with US$24.66 million (AU$34.52 million) in cash, roughly US$5 million (AU$7 million) in stablecoins, and 91,144 XRP worth about US$129,484 (AU$181,278). The litigation trust is attempting to claw back those funds for redistribution to creditors.
The filing further alleges that a senior Prime Trust executive who also advised Swan privately communicated with Swan CEO Cory Klippsten using encrypted messages shortly before Nevada regulators intervened. Court records state the messages were set to automatically delete after 24 hours during the period leading up to Swan’s withdrawals.
Prime Trust was shut down by Nevada regulators in June 2023 before filing for bankruptcy two months later amid claims it could not meet customer obligations.
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