Swan Bitcoin is facing a nearly $1 billion lawsuit tied to the 2023 collapse of crypto custodian Prime Trust.
Summary
- PCT Litigation Trust seeks $970 million from Swan Bitcoin over transfers before Prime Trust bankruptcy.
- The complaint says Swan moved 11,994 BTC plus cash, stablecoins, and XRP before bankruptcy filing.
- Swan disputes the claims, saying customer assets held in trust cannot repay general unsecured creditors.
PCT Litigation Trust has filed a lawsuit against Electric Solidus, Inc., the company operating as Swan Bitcoin, in the U.S. Bankruptcy Court for the District of Delaware. The complaint seeks to recover crypto and cash that the trust says moved out of Prime Trust before its bankruptcy filing.
A Stretto court filing tied to Prime Core Technologies says the complaint alleges Swan moved fiat and crypto from Prime shortly before bankruptcy.
The claim centers on about 11,994 Bitcoin, $24.66 million in cash, roughly $5 million in stablecoins, and 91,144 XRP. Blockspace, which linked to the court filing, reported that the trust is seeking more than $970 million based on current Bitcoin prices.
Prime Trust bankruptcy claim centers on insider information
The complaint claims Swan used non-public information to avoid losses before Prime Trust failed. It says a senior Prime Trust executive, who also served as a paid outside adviser to Swan, contacted Swan CEO Cory Klippsten before key meetings with Nevada regulators.
The suit claims Swan asked to move its entire business away from Prime Trust on May 25, 2023, one day before Prime met with the Nevada Financial Institutions Division. The complaint says the timing helped Swan avoid losses that other Prime customers later faced.
The filing says, “Swan knew to transfer fiat and crypto from Prime immediately prior to Prime filing for bankruptcy to avoid catastrophic losses.” Swan has not filed a court response to the new complaint, based on available public reporting.
Swan Bitcoin disputes Prime Trust estate claims
Swan has denied the core argument through a representative statement. The company said, “Prime Trust held customer property in individually-owned trust accounts.”
The representative also said, “Customer assets held by a trust company are not available to general unsecured creditors, and we expect the courts to say so.” That defense frames the dispute around whether the assets belonged to Swan, Swan customers, or the Prime Trust bankruptcy estate.
The trust argues the assets should return to the estate for creditors. Swan’s position is that the estate is trying to take assets held in trust as customer property. The court will now need to examine the custody agreements, transfer timing, and the alleged access to inside information.
Prime Trust collapse remains a crypto custody case
Prime Trust’s collapse began in 2023 after Nevada regulators said the custodian was insolvent and could not meet customer withdrawal requests. Earlier reports noted that regulators placed Prime Trust into receivership after finding its financial position unstable.
Previously, crypto.news reported that Prime Trust later filed for Chapter 11 bankruptcy after Nevada regulators found the company insolvent. That report also said Prime Trust had used customer money to pay withdrawals since December 2021 and owed customers about $82 million in missing deposits and fiat currency.
The new Swan Bitcoin case adds another court fight to the Prime Trust fallout. It also keeps attention on crypto custody controls, trust account treatment, and how courts handle customer assets after a custodian fails.
Separate crypto.news coverage has also followed Swan Bitcoin’s other legal disputes, including its request to subpoena Cantor Fitzgerald and Howard Lutnick in a Bitcoin mining fight tied to Tether and former staff.
