The litigation trust overseeing bankrupt crypto custodian Prime Core Technologies Inc. has launched a clawback suit in the U.S. Bankruptcy Court for the District of Delaware, seeking to recover nearly $93.6 million in alleged preferential transfers made to a London-based trading partner in the weeks before Prime's collapse.

In the complaint filed Friday, the PCT Litigation Trust said Prime paid $244.4 million to Enigma Securities Ltd. and affiliate Makor Securities London Ltd. between May 16 and June 21, 2023, just before Nevada regulators forced Prime Core into Chapter 11 bankruptcy.

This, the trust said, clearly meets the five elements of avoidable preference claims, given the payments were property of Prime, made to a creditor, on account of an antecedent debt, while Prime was insolvent, and within 90 days of its Aug. 14, 2023, petition to file for bankruptcy.

After subtracting Enigma's potential "new-value" defense of about $150.8 million, the trust pegs recoverable preference exposure at $93,576,258.70.

"Prime's transfers to Enigma during the preference period exacerbated Prime's already precarious financial position, accelerating the downward financial spiral that culminated in Prime's Chapter 11 filing," the trust said in the complaint.

The Enigma suit builds on an earlier clawback action the same litigation trust filed against Crescent Financial Inc. in late July, which seeks to recover about $2.1 million in pre-bankruptcy transfers made under similar circumstances.

In both cases, the trust alleged that Prime used commingled customer funds to pay favored counterparties as its finances unraveled, saying the relationships were strictly debtor-creditor, not fiduciary, and echoing U.S. Bankruptcy Judge J. Kate Stickles' July 18 opinion that Prime's assets and customer deposits were so intermixed that they must be treated as property of the estate.

The trust argued in this case that Prime was insolvent during the preference period, citing $179 million in liabilities against $44 million in assets, adding that the payments enabled Enigma to receive more than it would have received in a Chapter 7 liquidation.

The trust said that because Prime and Enigma's relationship was purely debtor-creditor, not fiduciary or custodial, the transferred funds are property of Prime's estate and subject to avoidance, rather than assets Prime merely held in trust for Enigma.

"The [master services and custodial] agreements establish that the parties always maintained a strictly debtor-creditor relationship," the trust said.

The trust also cited Judge Stickles' earlier opinion on Prime's involvement with Crescent, where she said Prime's customer and company's assets were "hopelessly commingled" and "not traceable," which the trust argued forecloses and claim that Enigma's deposits were segregated or immune from clawback.

The trust said Prime also kept all customer deposits, including Enigma's, in omnibus bank accounts, sweeping funds daily between accounts in round numbers with no link to specific clients.

"The internal ledger was errantly and later intentionally corrupted by Prime," the trust said.

The trust pointed out that Prime employees testified that fake wire entries were created to mask Prime's use of customer cash to replace roughly $82 million in missing Ethereum.

Because Prime's records were unreliable and its accounts mixed client and company money, the trust said, "it is impossible to identify, trace, or otherwise distinguish" the funds Enigma withdrew.

Representatives for the parties did not respond to immediate requests for comment Tuesday.

PCT Litigation Trust is represented by Joseph M. Aminov, Darren Azman, Magali M. Duque, Joseph B. Evans, Jessica Greer Griffith, David R. Hurst, Patrick V. Kennedy and James Pardo of McDermott Will & Schulte LLP.

Counsel information for Enigma Securities Ltd. was not available Tuesday.

The case is PCT Litigation Trust v. Enigma Securities Ltd., case number 1:25-ap-52370, in the U.S. Bankruptcy Court for the District of Delaware.

The underlying bankruptcy case is In re: Prime Core Technologies Inc. et al., case number 1:23-bk-11161, in the U.S. Bankruptcy Court for the District of Delaware.