Swan Bitcoin don face $1B law suit over Prime Trust transfers before dem go bankrupt

Dem sue Swan Bitcoin nearly $1 billion for Delaware bankruptcy court over alleged pre-bankruptcy transfers wey connect to the 2023 collapse of crypto custodian Prime Trust. The complaint talk say Swan Bitcoin (through Electric Solidus) use alleged insider access move assets days before Prime Trust file for bankruptcy. The trustee dey claim say Swan Bitcoin collect $24.66M cash plus 11,994 BTC, about $5M in USDT, and some small crypto positions before Prime Trust file bankruptcy for August 2023. One main claim involve one senior Prime Trust executive wey, while e dey work for the custodian, reportedly also dey paid adviser to Swan Bitcoin under one side arrangement since July 2019. The lawsuit highlight timing around Prime Trust’s Nevada regulator meeting on May 26, 2023. E say the executive start encrypted, auto-deleting chat with Swan CEO Cory Klippsten four days earlier and withdrawals escalate to a “full evacuation” one day before the meeting. Plaintiff still talk say Prime Trust create internal ledger entry (“PT FBO Swan Customers”) on May 25 to make transfers appear like customer-held trust assets. Swan Bitcoin deny these allegations, say the assets bin for individually owned trust accounts and no suppose form part of Prime Trust’s general unsecured creditor pool. Court go consider custody agreements, transfer timing, and asset ownership, while plaintiff wan recover value and block any future Swan Bitcoin claims against the bankruptcy estate until dem make restitution. For traders, the Swan Bitcoin case show ongoing legal risk about custody/settlement for crypto. E fit affect short-term sentiment around custody providers and custody-related tokens, although spot market impact go depend on later court rulings and exposure confirmation.