Prime Trust estate sues Swan Bitcoin to recover nearly $1 billion

A trust representing the bankrupt cryptocurrency custodian Prime Trust has filed a lawsuit seeking the recovery of nearly $1 billion in assets from the financial services firm Swan Bitcoin. The complaint, filed in U.S. Bankruptcy Court for the District of Delaware, alleges Swan used insider information to withdraw funds days before Prime Trust’s collapse in 2023.

The PCT Litigation Trust accuses Electric Solidus, Inc., which operates as Swan Bitcoin, of receiving approximately 11,994 Bitcoin, $24.66 million in cash, roughly $5 million in stablecoins, and over 91,000 XRP from Prime Trust shortly before the custodian filed for Chapter 11 bankruptcy in August 2023. At current valuations, the Bitcoin alone is worth over $900 million.

Central to the lawsuit is the alleged role of a senior Prime Trust executive who also served as a paid outside adviser to Swan. The complaint states this individual initiated encrypted chats with Swan CEO Cory Klippsten in late May 2023, setting messages to auto-delete every 24 hours. These communications reportedly began days before a critical meeting between Prime Trust and Nevada regulators on May 26.

According to the filing, Swan requested the...