Why is Swan switching platforms for its financial operations?
As a technology company, Swan partners with regulated financial institutions to handle client funds. Swan does not receive or handle client funds at any time.
More than a year ago, Swan embarked on a journey to create relationships with multiple partners for resiliency and optionality to expand its business. Today, we work with five different financial institution partners for various services provided to our clients.
At this time, we have determined that some of our newer partners would better serve our clients and their needs. This has led to Fortress resigning as custodian and appointing our new partners as successors.
How do I know if my account is affected by the platform transition?
Since mid-February this year, all Personal accounts at Swan are already onboarded to our new platform partner for Personal accounts, Bakkt, and not Fortress. They are not affected by this transition.
Affected clients will see an account labeled “legacy” in their apps. Corporate accounts, IRA accounts, and International accounts are also affected by the transition.
Do I need to take action?
No action is required for Personal and Entity accounts (except NY Entities). Such accounts will automatically transfer to our new platform partner, Bakkt, a public company majority-owned by Intercontinental Exchange (the parent of the New York Stock Exchange).
No action is required for IRA accounts. Such accounts will transition to Equity Trust, a 50-year-old family-owned trust company that has been in the IRA business since 1983.
Action is required for International clients and NY Entities. Such clients should withdraw their Bitcoin and dollars off the platform as soon as possible. Following December 20, Fortress Trust will liquidate any funds left over, and a check will be sent for the remaining balance.
Swan clients with non-IRA accounts have always been encouraged, and continue to be encouraged, to take advantage of free and automatic withdrawals to withdraw their assets to self-custody at any time.
Private clients can check in with their representatives for additional guidance.
Did I get charged a fee? Why does part of my account balance appear locked?
On or around Saturday, November 23, Fortress Trust, the financial institution holding your funds, locked up to $125 per account, denominated in USD and/or Bitcoin, which appeared to be labeled as a debit. As soon as we found out about the "debits," we immediately contacted the Fortress team and alerted our clients that we would dispute this action.
On Thursday, November 28, Fortress reversed all debits into client accounts, restoring the USD and BTC but keeping these amounts locked. On Nov 28, We updated our systems to reflect this status in the USD history tab on your Swan web dashboard. On Nov 29, we further updated the web dashboard to clearly display the locked balances at the top of the account.
In a communication directly to clients on November 28 with subject “Fortress Trust Resignation: Update”, Fortress indicated that such funds are to be reserved pending the transition of accounts to successor custodians. We are aware that the balance lock may affect certain clients who are not moving to a successor custodian, wish to offboard, or wish to move to a custodian of their choice. We are continuing to engage with Fortress on this topic.
If you have questions or complaints regarding your funds being "locked," we encourage you to contact Fortress directly at support@fortresstrust.com.
Note that the locked balances may not appear in your mobile app until the week of Dec 2 due to the length of time it takes to get a mobile app updated. Please access your balances at https://app.swanbitcoin.com.
Please note that Fortress Trust charged a separate $45 fee to move your IRA account to Equity Trust. As a reminder, Swan is covering that fee as it was an agreed contractual charge. We will update you soon.
We will update this FAQ and issue communications once an update is available.
Why did my withdrawal fail? Is that related to Fortress resignation?
Fortress Trust locked a portion of funds from some Swan Clients which has disrupted their withdrawals. If your account was affected, please re-initiate the withdrawal at your earliest convenience.
Clients should contact fortress directly regarding any locked funds, pursuant to their notice. support@fortresstrust.com.
Where are the terms governing my agreement with Fortress Trust?
All Swan clients execute agreements with one or more regulated financial institutions when opening a Swan account. The agreement between you and the financial institution governs how funds are handled, while the Swan terms of service govern how Swan provides technology products to you. For your convenience, you can find the terms you agreed to when signing up for the financial institution account on the settings tab inside the legacy account, available at the top of your web dashboard at https://app.swanbitcoin.com.
Why does Swan partner with custody service providers instead of managing custody itself?
Separation of brokerage and custody is the historical model for financial services, and the requirement to use qualified custodians for safeguarding assets exists for good reason. It provides an added layer of protection and transparency for clients. Such practice is expected to become a standard in the Bitcoin industry and is already required for specific account types, like IRAs and institutional accounts.
For example, FTX's downfall in 2022 underscored the dangers of combining brokerage, exchange, and custody under one roof. FTX misused customer funds that were supposed to be securely held, leading to billions in losses and the erosion of trust in the industry.
At Swan, protecting our clients' Bitcoin is our highest priority. Partnering with world-class financial institutions like BitGo, Bakkt, and Equity Trust ensures your assets are held with providers specializing in secure, compliant custody services. This approach allows Swan to focus on providing the best Bitcoin product experiences while leveraging the expertise and infrastructure of industry-leading financial institutions to safeguard your coins and interface with the fiat system.