Swan Bitcoin Faces Nearly $1 Billion Lawsuit Over Prime Trust Asset Transfers

Swan Bitcoin is facing a major lawsuit after Prime Trust’s post-bankruptcy trust accused the company of withdrawing nearly $1 billion in crypto and cash shortly before the custodian collapsed in 2023.

Prime Trust Lawsuit Claims Insider Access Was Used

The lawsuit, filed in Delaware bankruptcy court, claims Swan Bitcoin used insider knowledge to remove assets from Prime Trust as the company’s financial condition worsened. According to the complaint, Swan’s parent company, Electric Solidus, allegedly received more than $24.6 million in cash, 11,994 Bitcoin currently valued at around $923 million, nearly 5 million USDT, and smaller digital assets before Prime Trust filed for bankruptcy in August 2023.

At the center of the allegations is a senior Prime Trust executive who reportedly worked as a paid adviser to Swan since 2019. Court filings claim the executive allegedly communicated with Swan CEO Cory Klippsten through encrypted messages that automatically deleted every 24 hours just days before major withdrawals began.

Swan Bitcoin Accused of Emptying Prime Trust Accounts

The complaint says Swan initially planned a partial transfer but later moved nearly all funds one day before Prime Trust met Nevada regulators in May 2023.

The lawsuit also alleges Prime Trust created a special internal ledger called “PT FBO Swan Customers” to make the funds appear separated and protected from bankruptcy claims. The trust is now seeking to recover the transferred assets and block future claims from Swan until repayment is made.