A lawsuit has been filed against Swan Bitcoin, claiming the company improperly withdrew nearly $1 billion in Bitcoin and cash from Prime Trust shortly before the custodian's bankruptcy in August 2023. The complaint, lodged in Delaware bankruptcy court by Prime Trust's post-bankruptcy trust, alleges that Swan exploited insider information to execute these transfers.
Prior to the bankruptcy, Swan allegedly received over $24.6 million in cash and approximately 11,994 Bitcoin, valued around $923 million, along with other digital assets. Central to these claims is a senior Prime Trust executive who reportedly had a side advisory arrangement with Swan since July 2019. This executive is accused of communicating with Swan's CEO, Cory Klippsten, through an encrypted chat that was set to delete messages every 24 hours.
The timing of the withdrawals raises questions, particularly as they occurred just before a crucial meeting with Nevada regulators on May 26, 2023. The lawsuit suggests that Swan acted to safeguard its assets from potential losses linked to Prime Trust's financial downturn.