blockworks.co 1 h Reading time: ~4 m
Swan Bitcoin appears to have been struggling as the company has moved to transfer all of its assets to two new custodians — even as its CEO harshly criticized other crypto exchanges in the wake of the SEC’s lawsuits against Binance and Coinbase this week.
Users of the bitcoin-only trading platform this week have reported significant outages that they say have prevented them from moving assets with ease. Fiat on- and off-ramp services were affected.
The company said in a statement posted on its website Wednesday that “all funds are being transferred” to its qualified custodians, Fortress Trust and BitGo Trust Company. CEO Cory Klippsten confirmed this in an email to Blockworks in which he also noted that the company was migrating from Prime Trust and Fireblocks.
The US-based company’s site also listed a number of service outages dating back to May 26.
Whether the root cause of Swan’s problems — which appear to span multiple weeks — could be attributed entirely to the custodian switch was not immediately clear.
The company told customers that the transfer of their assets to Fortress and BitGo commenced on May 26, coinciding with the outages. Swan said that the company “carefully weighed the pros and cons” of moving all assets in one swoop, adding that it had reached a consensus that “moving at once will create the least amount of disruption for Swan clients.”
Swan’s website on Wednesday separately said its “bitcoin purchasing” and “ACH Pull” services were both “under maintenance.”
“Communication with clients has been constant and detailed,” Klippsten told Blockworks Wednesday. He added that withdrawals of BTC and USD were available throughout the custodian migration via client service channels. The ability for users to withdraw via the website or app directly resumed Tuesday.
‘Degraded performance’ across business lines
At the same time, Swan’s wire transfers, as well as its custody and trading business lines, were both operating under “degraded performance.” The company on its website listed a “major platform upgrade” as being under way each day since May 30.
Swan attributed its custodial switch to plans the company put in place in January. At the time, Klippsten wrote that his company had 100 full-time employees, or “Swans,” divided across five continents and cited its “rapid expansion into new products and markets.”
From its roots at a bitcoin (BTC) exchange, Klippsten’s Swan has over the years rolled out a number of new bitcoin-only products.
Those include support for both retail and institutional investors, including an advisory service designed to cater to registered investment advisers (RIAs). Swan has also played up its BTC-based retirement account services, as well as bitcoin maximalist job boards.
But Swan’s Twitter account, as well as that of Klippsten, has been active this week reacting to the SEC’s allegations against Binance and Coinbase for alleged securities violations and other charges.
The exchanges have denied wrongdoing.
Imagine if Coinbase focused on Bitcoin financial services rather than altcoin trading.
They’d be a massive financial institution with millions of diehard fans around the world.
No one forced Armstrong to go along with Balaji’s plan to add a hundred unregistered securities.
— Cory Klippsten 🖐️ Swan.com 🦢 #Bitcoin (@coryklippsten) June 6, 2023
The company hosted a Twitter Space about the lawsuits — which included “#Bitcoin Not Crypto” in the title.
Klippsten called the SEC’s lawsuit against Coinbase an outcome that was “obvious, inevitable and entirely self-inflicted” in a Wednesday Twitter thread, calling out Coinbase CEO Brian Armstrong and Balaji Srinivasan, a former chief technology officer at the exchange.
Coinbase Chief Legal Officer Paul Grewal said Tuesday that the SEC’s actions amid the lack of US crypto regulations harms companies like Coinbase “that have a demonstrated commitment to compliance.”
Custodial migration “not 100% complete”
Some Swan users appeared confused as to the status of their services, Swan on its website site said it had put in place a number of measures to update customers on the status of their assets.
That included a new “snapshot” feature designed to provide a placeholder update of customer balances “at the time of migration.” The custodial switch was still not “100% complete” through 5 pm ET on Wednesday.
Customers could not, however, view the balance of their dollar holdings during the move. Swan told customers that the migration ought to be complete by June 11 — it started on May 26.
On Wednesday, “self-service Bitcoin withdrawals” remained unaffected by the outages, while “instant buys,” as well as “automated savings plans” and “automated withdrawals” were not operational.
Klippsten said he expected “buys” to be available on Wednesday night or Thursday, adding that new user sign ups could resume by the weekend.
Swan capped off its post by saying that the company would re-open in Texas in a “plan to return by July or August.” And the firm told customers that it’s “working on bringing Swan services to New York” within three to six months.
“Stay tuned for an email announcement!” Swan said.