Prime Trust’s post-bankruptcy trust has sued Swan Bitcoin, claiming the Bitcoin services provider stole about $1 billion in assets from the custodian using confidential information only days before the trust went bankrupt.
The corporate entity behind Swan, Electric Solidus, is accused in a complaint filed in Delaware bankruptcy court of receiving roughly 5 million USDt (USDT), over $24.6 million in cash, 11,994 Bitcoin (BTC) with a current value of about $923 million, and smaller amounts of other digital assets prior to Prime Trust’s bankruptcy in August 2023.
Nearly $1B Withdrawn Claim
An unnamed senior executive at Prime Trust is at the heart of the claims; this individual had a side arrangement with Swan beginning in July 2019 in which he was paid to assist Swan while he was employed by the firm.
In an encrypted discussion with Swan CEO Cory Klippsten, which was meant to auto-delete every 24 hours, the executive reportedly began four days before Prime Trust’s meeting with Nevada authorities on May 26, 2023. Swan reportedly withdrew over 10,000 Bitcoin from Prime Trust the day following the meeting, at which point the facility was disabled.
Prime Trust’s post-bankruptcy litigation trust is attempting to recoup assets that were moved out of the custodian in the days before its demise, and this action is only one aspect of that larger endeavor. Swan allegedly took advantage of his position within Prime Trust’s finance team to transfer money to himself before other clients did so, according to the trust.
The lawsuit goes on to say that only one day before the meeting in Nevada, Swan suddenly turned a partial asset transfer into a complete withdrawal of all monies. Slack messages included in the document show that Prime Trust employees rushed to comply before the day’s end.
The lawsuit claims that on May 25, Prime established an unexistent internal ledger with the name “PT FBO Swan Customers.” This was done to make it seem that Swan’s money had always been in a separate trust, which would have made it more difficult to recover in the event of bankruptcy.