The PCT Litigation Trust has filed a lawsuit against Electric Solidus, Inc., doing business as Swan Bitcoin, seeking approximately $970 million to $1 billion in assets allegedly transferred out of Prime Trust just before the custodian’s 2023 bankruptcy. The suit, lodged in the U.S. Bankruptcy Court for the District of Delaware, claims Swan used non-public internal information to preemptively move its holdings, avoiding losses other creditors suffered.
According to court filings, the assets in question include roughly 11,994 Bitcoin (BTC), $24.66 million in fiat cash, about $5 million in stablecoins, and 91,144 XRP. The complaint alleges that a senior Prime Trust executive who also served as a paid outside adviser to Swan contacted Swan CEO Cory Klippsten ahead of key regulatory meetings. It states Swan asked to migrate its entire business away from Prime Trust on May 25, 2023, the day before Prime Trust met with the Nevada Financial Institutions Division. Shortly after, Nevada regulators placed Prime Trust into receivership due to insolvency, and the firm filed for Chapter 11 bankruptcy in August 2023.
Swan Bitcoin disputes the trust’s claims, asserting that Prime Trust held customer property in individually-owned trust accounts and that such assets are not available to general unsecured creditors. “Customer assets held by a trust company are not available to general unsecured creditors, and we expect the courts to say so,” a Swan representative said. The legal battle thus centers on whether the transferred assets belonged to Swan, to its customers, or to the Prime Trust bankruptcy estate.
The case adds to the fallout from Prime Trust’s collapse, which began after regulators found the custodian had used customer funds to cover withdrawal demands since December 2021 and owed customers approximately $82 million in missing deposits. The Swan lawsuit is one of the largest in terms of asset value, and its outcome could set a precedent regarding the use of non-public information during a custodian’s financial distress.
