Prime Trust vs Poloniex: The Exchange Never Answered the Lawsuit, and a Judge Ordered It to Pay $9.08M

On 15 October 2026, Judge J. Kate Stickles of the US Bankruptcy Court in Wilmington, Delaware, signed a three-page order against Polo Digital Assets Ltd, the company that runs the crypto exchange Poloniex. It must pay $9,084,253.77, plus costs after judgment, to the PCT Litigation Trust, the body collecting money for the customers of Prime Trust, a crypto custody company that collapsed in 2023.

The judge did not weigh the evidence and find for one side. Polo lost by default. The order says Polo "failed to answer or otherwise respond to the Complaint by the applicable deadline." In a US civil case, a defendant that never files an answer can have judgment entered against it, much as a tenant who ignores an eviction hearing loses without a word being said in their defence.

The order is careful about the second defendant in the same case, the TRON founder Justin Sun. The court record describes Polo as a company "owned and/or controlled by Sun". Sun did answer the lawsuit and is defending himself. The judgment states that nothing in it counts as a finding against him, may be used as evidence against him, or limits his defence. Neither Polo nor Sun commented on the judgment in reports by the crypto news site Protos and the Spanish-language outlet DiarioBitcoin, which first covered it.

What Prime Trust was, and how it fell

Prime Trust, based in Nevada, was a trust company: a business licensed to hold other people's money and assets, in the way a bank's custody arm looks after a pension fund's shares. In crypto it played a bigger role. Thousands of crypto firms used it to reach the ordinary US banking system, turning digital coins into dollars and back. Its Nevada trust charter let customers move money through Prime without each getting its own money transfer licence in many states, a service the court calls "money transmission as a service".

The trouble began in December 2021, according to the complaint. Prime found it could not open a digital wallet holding more than 11,000 ether (ETH), the coin of the Ethereum network, that a customer had sent in. When customers asked for their ETH back, Prime bought replacement coins on the market with dollars from bank accounts that pooled every customer's money. That left a hole of nearly $82 million. Prime executives admitted under oath that the company had faked entries in its own books to hide the purchases, the complaint says.

On 21 June 2023 Nevada's Financial Institutions Division ordered Prime to stop taking deposits, finding it was "operating at a substantial deficit and/or is insolvent". A rescue deal with the custody firm BitGo was cancelled the next day. Prime Core Technologies, Prime Trust's parent, filed for Chapter 11 bankruptcy protection on 14 August 2023. On that date, the complaint says, it held about $44.2 million in assets against $179.3 million in debts.

Why the money was paid out

US bankruptcy law gives the estate of a failed company the power to claw back a "preference": a payment to a creditor in the 90 days before the bankruptcy filing. The aim is that customers who got their money out in the final weeks share the loss with those who did not, rather than being paid in full while everyone else waits. A company that pays one supplier in full on the way down can be made to recover that money for all the others.

The PCT Litigation Trust sued Polo and Sun on 12 August 2025. Its case, as told in the complaint and summarised by the court:

In October 2019 Sun and Polo each signed a custody account agreement with Prime. Polo also had an escrow agreement under which Prime held funds connected with Polo's purchase of the Poloniex exchange. In March 2023 the US Securities and Exchange Commission (SEC) sued Sun, accusing him of unregistered sales of securities and manipulative trading. In response, the complaint says, Prime decided to cut ties with Sun and the companies he controlled. It ended the agreements on 16 May 2023, using a clause that allowed immediate termination if Prime "becomes aware of or suspects" an account holder of criminal activity.

Prime then returned the money. Between 16 May 2023 and the bankruptcy filing it sent $9,083,903.77 to Sun and Polo from a pooled account at BMO Harris Bank, according to the trust: $7,897,428.40 linked to the custody accounts and $1,186,475.37 linked to the escrow. The trust says those payments must come back so they can be shared among all of Prime's creditors. The judgment is $350 higher than that total; the order does not explain the difference.

The SEC case that set this in motion is over. In March 2026 the SEC dismissed its claims against Sun, the Tron Foundation and the BitTorrent Foundation, and Rainberry, a Sun company formerly called BitTorrent Inc., agreed to pay a $10 million penalty without admitting or denying the allegations.

Sun's side of the case

Sun's answer has been that a US court has no power over him. In a motion filed on 21 January 2026 he said he lives in Hong Kong, has no home, business or property in the United States, had no purposeful contact with the country, and that the claim rests on the actions of others, not on anything he directed at the US. He also argued that the complaint fails to state a valid claim.

On 30 September 2026 Judge Stickles rejected the first argument. She found Sun had signed a custody contract with a Nevada company governed by Nevada law, had used US bank accounts through Prime, had personally acknowledged the termination and told Prime to send more than $1 million to a US bank account, and had met Prime's chief executive in the US. The ruling covered jurisdiction only. It said nothing about whether Sun must repay any money; that question is still to be fought.

On 13 October 2026 the judge lifted a pause on evidence gathering. Both sides can now demand documents and testimony on the merits of the case, which is the discovery from Sun that Protos reported the trust is seeking.

Poloniex has other legal trouble tied to its owner. Protos reported that the FTX estate, which is recovering money for customers of the failed exchange FTX, has also sued Sun, Poloniex and HTX, another exchange linked to Sun. The judgment against Polo is now enforceable. No payment has been reported.