TL;DR:
- Swan Bitcoin faces a $970 million lawsuit for allegedly using privileged information to withdraw assets from Prime Trust before its bankruptcy.
- The PCT Litigation Trust claims approximately 11,994 BTC, $24.66 million in cash, $5 million in stablecoins, and 91,144 XRP withdrawn months before the collapse.
- The lawsuit is part of a broader campaign also targeting Strike, Compass Mining, Fold, and Galaxy Digital as former Prime Trust partners.
The trust created under the reorganization plan of Prime Core Technologies filed a lawsuit of 94 pages in the United States Bankruptcy Court for the District of Delaware against Swan Bitcoin, the platform operated by its parent entity Electric Solidus, Inc.
The lawsuit, filed under case number 26-50331 before Judge J. Kate Stickles, seeks to recover assets worth approximately $970 million that, according to the filing, were withdrawn in advance and under conditions of informational privilege.
Encrypted Communications and Privileged Information
The core of the accusation is an alleged internal tip. According to the PCT Litigation Trust, a senior Prime Trust executive who also served as a paid advisor to Swan —and who, according to the filing, lived near the company’s CEO, Cory Klippsten— allegedly alerted Swan to the custodian’s financial deterioration days before that information became public.
The lawsuit points to an encrypted, self-deleting conversation initiated on May 22, 2023, just days before a critical meeting of Nevada’s Financial Institutions Division scheduled for May 26. On that basis, the trust alleges that Swan accelerated asset transfers to Fortress and BitGo to avoid losses while other clients and creditors were still unaware of the custodian’s true situation.
Swan rejected the accusations. The company argued that Prime Trust held client assets in individually owned trust accounts and that, therefore, they were not available to general unsecured creditors. The firm indicated it expects the courts to validate that position. No formal response has been filed yet.
Swan’s Case Could Set Industry Precedents
Prime Trust was one of the most widely used crypto custodians during the 2021–2023 cycle. Its situation deteriorated rapidly in 2023 after losing access to a wallet holding approximately $80 million and, according to court documentation, having used client funds to cover withdrawals.
Nevada regulators issued a cease-and-desist order in June 2023, and the company filed for Chapter 11 on August 14 of that year. The PCT Litigation Trust also initiated similar recovery actions against Strike, Compass Mining, Fold, and Galaxy Digital. The standard adopted by the courts regarding Swan’s defenses could determine the outcome of all those cases still active in Delaware.
