Swan Bitcoin sued by Prime Trust over bankruptcy trust, allegations of $970M in insider withdrawals exposed

The PCT litigation trust established by the Prime Core Technologies bankruptcy estate filed a 94-page adversary complaint on May 15 in the U.S. Federal Bankruptcy Court in Delaware against Swan Bitcoin’s parent company, Electric Solidus, Inc., seeking to recover approximately $970 million in assets.

Core allegations in the complaint: asset scale and withdrawal timeline

The assets sought to be recovered (confirmed):

· Approximately 11,994 BTC (about $938 million at recent market prices)

· Approximately $24.66 million in cash

· $5 million in stablecoins (USDT and USDC)

· 91,144 XRP

Preferential payment period: May 16, 2023 to August 14, 2023 (90 days before Prime Trust filed for Chapter 11 bankruptcy protection). The complaint alleges that during this period, when Prime was already insolvent, Swan withdrew the large amounts of assets listed above.

Asset transfer timeline: In June 2023, Swan allegedly completed the transfer of customer assets to Fortress and BitGo weeks earlier. At the time, Swan said the related actions were connected to system upgrades. The PCT litigation trust acknowledges that Swan injected some new assets in the same period (about 1.44 BTC and $2.22 million in cash), but argues that the net withdrawal scale was still substantial.

“Insider tip” allegations: confirmation details of crypto chat records

Chat log start time: May 22, 2023 (the days before May 26, the key meeting date of the Nevada Division of Financial Institutions). Log characteristics: the complaint describes them as crypto and automatically self-destructing messages.

The complaint also points out that, a few days after the alleged internal communications began (May 25, 2023), an account entry labeled “PT FBO Swan Customers” was created. The PCT litigation trust believes this was an operation to fabricate an appearance of asset segregation.

Parties’ positions and the progress of the lawsuit

Swan Bitcoin’s confirmed position: The company previously argued in relevant filings that assets held by Prime Trust on behalf of customers in the form of a trust are not within the scope of payments to general unsecured creditors; Swan said it expects the court to adopt its view. Prior court ruling: on July 18, 2025, Judge J. Kate Stickles ruled that, due to asset commingling and the terms of the agreement, the assets held by Prime belong to the bankruptcy estate, but kept review of certain specific exemptions.

Similar lawsuits: The PCT litigation trust has filed similar recovery actions against Strike, Compass Mining, Fold, and Galaxy Digital, with each case focusing on issues of asset segregation, commingling, and transfers of priority before the bankruptcy filing. The case number is 26-50331, handled by Judge Stickles.

Frequently asked questions

What is the preferential payment period, and why is it crucial to this case?

The preferential payment period is the 90 days before the bankruptcy filing under U.S. bankruptcy law. During this time, if the debtor makes disproportionate payments to a specific creditor while insolvent, the bankruptcy estate trustee may pursue recovery. This case’s preferential payment period is May 16, 2023 to August 14, 2023. The PCT litigation trust alleges that Swan’s withdrawals during this period are avoidable preferential transfers.

What does Swan Bitcoin’s “trustee defense” mean?

Swan’s core defense is that assets Prime Trust holds for customers in the form of a trust belong, as a matter of law, to the beneficiaries (customers), not to Prime Trust itself; therefore, they should not be treated as assets available for the bankruptcy estate to recover. Judge Stickles’ July 2025 ruling found that Prime’s assets are part of the bankruptcy estate (based on asset commingling and the terms of the agreement), but it reserved review of certain specific exemptions, leaving some room for Swan’s defense.

Why might this ruling affect lawsuits against other companies?

The PCT litigation trust has brought similar recovery actions against Strike, Compass Mining, Fold, and Galaxy Digital, and all cases revolve around similar legal issues. The court’s ruling on Swan’s fiduciary-duty and preferential-transfer defenses will provide a precedential reference for the legal framework in other cases.