Swan Bitcoin sued for nearly $1B over pre-bankruptcy transfers from Prime Trust

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Four days before Prime Trust met with Nevada regulators on May 26, 2023, the executive allegedly opened an encrypted chat with Swan CEO Cory Klippsten and set messages to auto-delete every 24 hours. The feature was allegedly turned off the day after the meeting, when Swan withdrew more than 10,000 Bitcoin from Prime Trust. Source: CourtListener The lawsuit is part of a broader effort by Prime Trust’s post-bankruptcy litigation trust to recover assets transferred out of the custodian in the weeks leading up to its collapse. The trust alleges Swan used insider access to move funds ahead of other customers as Prime Trust’s financial condition deteriorated. “Swan knew to transfer fiat and crypto from Prime immediately prior to Prime filing for bankruptcy to avoid catastrophic losses,” the complaint wrote. Cointelegraph reached out to Swan for comment, but did not receive an immediate response. Related: House Committee pushes Trump to fill CFTC seats as crypto regulation ramps up The complaint further alleges that Swan abruptly expanded a partial asset transfer into a full evacuation of all funds, one day before the Nevada meeting. Prime Trust staff scrambled to comply before the close of business that day, according to Slack communications cited in the filing. The complaint alleges Prime created an internal ledger labeled “PT FBO Swan Customers” on May 25, an account that did not previously exist, to make it appear Swan’s funds had always been held in a separate trust, which would have made them harder to claw back in bankruptcy. “In substance, however, those assets had not been and were not held in trust for the benefit of Swan’s customers,” the suit claims. The plaintiff is seeking recovery under preferential transfer and actual fraudulent transfer provisions of the Bankruptcy Code, and is asking the court to disallow any future claims Swan might assert against the estate until restitution is made. Magazine: Guide to the top and emerging global crypto hubs — Mid-2026 More on the subject

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