PCT Litigation Trust–a trust pursuing the litigation efforts of debtors to Prime Core Technologies, also known as Prime Trust–filed a complaint on Friday in the U.S. Bankruptcy Court for the District of Delaware against Electric Solidus, known as Swan Bitcoin, seeking to recover nearly $1 billion in bitcoin and other assets.
The suit alleges that Swan withdrew 11,994.08 BTC (worth $938 million at publication time), $24.66 million in cash, roughly $5 million in stablecoins, and 91,144 XRP (worth $129,484 at publication time) from Prime Trust in the 90 days before Prime’s August 2023 bankruptcy filing.
In total, the trust is seeking to recover over $970 million, based on bitcoin’s current price.
For its part, Swan Bitcoin disputes the claims, per a comment given to Blockspace:
“Prime Trust held customer property in individually-owned trust accounts. The bankruptcy estate is now trying to take assets it held in trust as custodian, from a party that never received them. Customer assets held by a trust company are not available to general unsecured creditors, and we expect the courts to say so,” said a representative for Swan Bitcoin.
The complaint disputes this framing, alleging the governing agreements between Swan and Prime expressly disclaimed any fiduciary relationship and that Prime created a “PT FBO Swan Customers” internal ledger designation on May 25, 2023—one day before its meeting with Nevada regulators—to give the false appearance that Swan’s assets had been held for the benefit of Swan’s customers the entire time.
Prime Trust’s suit against Swan joins similar cases against numerous other Bitcoin companies who once parked funds at the custodian. Case files name companies like Swan competitor Strike, along with other well known firms such as Compass Mining, Fold, and Galaxy Digital.
Insider information?
The complaint alleges Swan had access to inside information about Prime’s financial distress and used it to withdraw assets from Prime, and it seeks to claw back those assets from Swan and place them in Prime Trust’s bankruptcy estate.
Specifically, the suit alleges that a senior executive at Prime Trust—who was also a paid Swan advisor—contacted Swan Bitcoin CEO Cory Klippsten four days before the company met with Nevada regulators, and that the executive tipped off Klippsten about Prime Trust’s deteriorating financial condition.
“On May 22, 2023, four days before the meeting with Nevada FID, Senior Executive initiated a chat thread with Mr. Klippsten on an encrypted messaging platform and immediately set the chat to auto-delete messages after 24 hours,” the complaint reads.
“The next notification still available between Senior Executive and Mr. Klippsten was from May 27, 2023, the day after the Nevada FID meeting and the same day Swan transferred 10,080.1085 BTC from Prime. That notification shows that Senior Executive turned off the auto-delete feature,” it continues.
In addition to clawing back the funds, the trust is also requesting that the court disallow “any and all claim(s) filed or held by Swan against the Debtors in these Chapter 11 Cases.”
Swan has not yet filed a response. The case is assigned to Judge J. Kate Stickles in the U.S. Bankruptcy Court for the District of Delaware.
Download the filing below.
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