PCT Litigation Trust, the bankruptcy vehicle trying to recover money for creditors of the collapsed crypto custodian Prime Trust, sued crypto firm Swan Bitcoin for nearly $1 billion in BTC and other assets.
The lawsuit was first reported by Blockspace and was filed in the U.S. Bankruptcy Court for the District of Delaware against Electric Solidus, the company behind Swan Bitcoin.
- The case is part of the bankruptcy of Prime Core Technologies, the parent company of Prime Trust, which filed for Chapter 11 in August 2023.
The complaint alleges Swan withdrew around 11,994 BTC, over $24.6 million in cash, about $5 million in stablecoins and more than 91,140 XRP in the 90 days before Prime Trust filed for bankruptcy.
The core fight is whether the assets were customer property held by Prime Trust as custodian, or money that can be pulled into the bankruptcy estate to repay creditors.
Swan says the assets belonged to its customers and were held in individually owned trust accounts, not as money available to Prime Trust's 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 told Blockspace.
But the complaint says the argument doesn't match the paperwork
It claims Prime Trust only created the "PT FBO Swan Customers" label on May 25, 2023, one day before a meeting with Nevada regulators, to make the assets look like they had always been held for Swan's customers.
The complaint also claims Swan may have known Prime Trust was in trouble before moving the assets because a senior Prime Trust executive, who was also a paid Swan adviser, contacted Swan CEO Cory Klippsten on an encrypted app days before a key regulator meeting.
Prime Trust's estate has also filed similar actions against other crypto companies that previously kept funds with the custodian, including Strike, Compass Mining, Fold and Mike Novogratz's Galaxy Digital.