Background
During the period extending from May 30th, 2023 to June 9th, 2023, Timothy Howard (End User), the defendant, made four USDC deposits to the dedicated Coast Software (Integrator) wallet assigned to Coast Software by Prime Trust (Plaintiff).
These transactions followed a clear pattern standard in the blockchain industry where the user deposited a stablecoin, in this case $USDC, and requested a redemption in $USD to be wired to their Fiat denominated bank account.
The Plaintiff assigned the Integrator a unique EVM blockchain wallet address expressly for this purpose and to ensure that no co-mingling occurred between the Plaintiff’s USDC, the Integrator’s USDC and the End User’s USDC.
In the hours after each USDC deposit, the Plaintiff wired the End User USD to an external bank account. Thereafter, at irregular intervals, the Plaintiff performed a “Sweep” of the Integrator’s wallet address to remove the deposited USDC.
The use of this unique deposit address assigned to the Integrator makes the transactions in the Plaintiff’s complaint against the End User totaling $114,238 materially different from those described in the Distribution Opinion on commingling (D.I. 1085) in the In re Prime Core Technologies Inc. (Doc 1085 filed 07/18/25). The unique Coast Software assigned wallet address held all USDC deposited by the End User at the time of USD distribution. At that time, no co-mingling of USDC had occurred as will be demonstrated below.
Wallets
Prime Trust Deposit Funder Wallet
0x33fe7ad77394281e43cc82d86ad0cbb5b9e9575d
https://etherscan.io/address/0x33fe7ad77394281e43cc82d86ad0cbb5b9e9575d
This wallet was used by Prime Trust to fund Integrator wallets with Ethereum (ETH). This ETH that would later be used to pay for Transfer transactions that would “Sweep” Integrator wallets of other assets including USDC.
Prime Trust CoMingled Wallet
0x352e0242a58c4f43dc40f3ee9a2ea14ccc6bb2ea
https://etherscan.io/address/0x352e0242a58c4f43dc40f3ee9a2ea14ccc6bb2ea
This wallet was used by Prime Trust to hold blockchain assets belonging to the Plaintiff, Integrators and End Users.
Coast Software Dedicated Wallet
0x7205d3babcd962c20fbdc68939627cdb7ed3ff37
https://etherscan.io/address/0x7205d3babcd962c20fbdc68939627cdb7ed3ff37#tokentxns
This wallet address was assigned to Coast Software by the Plaintiff. All deposits of USDC to this address came from the End User. All deposits of ETH came from the Prime Trust Deposit Funder Wallet. This wallet address never received any other deposit from any other person, party or entity.
Timothy Howard Self-Custody Wallet
0x4a5ddfb1262b65Cc8Cfa519d3033e1472E92c353
https://etherscan.io/address/0x4a5ddfb1262b65cc8cfa519d3033e1472e92c353
The End User holds the private key to this wallet address. To demonstrate this, the End User has signed a transaction from the wallet including a message about the legal proceedings:
https://etherscan.io/tx/0x63bc2332aa3af3e9faab0e556592a0e489cd0ee934792a6b7c399b19628de54c
The message reads: Prime Trust redemption May/June 2023 – Timothy Howard – USDC to USD – pre-sweep traceable – unique Deposit Address
Transactions + Timeline
Group 1
Transaction 1 – May-30-2023 10:15:11 AM – USDC Deposit – 700 (~$699.93)
Transaction 2 – May-30-2023 03:56:11 PM – USDC Deposit – 70,272.143777 (~$70,265.33)
Transaction 3 – May-31-2023 Time Unknown – USD Withdrawal to account ending 5077 – $19,960.05
Transaction 4 – Jun-01-2023 Time Unknown – USD Withdrawal to account ending 5077 – $49,434.39
Transaction 5 – Jun-07-2023 02:13:59 PM – USDC Sweep – 70,972.143777 (~$70,965.26)
USDC less USD balance prior to Sweep: 1,577.70
Group 2
Transaction 6 – Jun-07-2023 04:02:59 PM – USDC Deposit – 42,266.152697 (~42,262.05)
Transaction 7a – Jun-07-2023 Time Unknown – USD Withdrawal Requested to account ending 5077 – $41,215.52
Transaction 8 – Jun-07-2023 11:45:47 PM – USDC Sweep – 42,266.152697 (~$42,256.52)
Transaction 7b – Jun-08-2023 Time Unknown – USD Withdrawal Received to account ending 5077 – $41,215.52
USDC less USD balance prior to Sweep: 2,682.33
Group 3
Transaction 9 – Jun-09-2023 09:56:47 AM – USDC Deposit – 1,000 ($999.77)
Transaction 10 – Nov-21-2023 02:09:59 PM – 1,000 (~999.77)
USDC less USD balance prior to Sweep: 3,682.33
Exhibits
Exhibit A – Bank statement for account ending 5077 (.PDF)
- Yellow Highlights – Prime Trust Transactions
- Green Highlights – Gemini Transactions
Exhibit B – Transaction history for Integrator’s assigned wallet (.xlsx)
- Yellow Highlights – USDC Deposits
- Red Highlights – USDC Sweeps
Analysis
This transaction history demonstrates a clear pattern of behavior by the End User. The End User sent USDC to the Integrator’s dedicated wallet address and then immediately requested payment in USD for the USDC held in the Integrator’s wallet. The End User was the only end user to utilize the Integrator’s wallet in this way. Therefore no other end user funds were co-mingled in the Integrator’s wallet address ending …ff37. Further, it shows that all USD transactions were requested prior to Prime Trust performing USDC Sweeps of the Integrator’s wallet.
Concession
Defendant acknowledges that any USDC remaining in the Deposit Address that was swept into Prime’s omnibus wallets prior to Defendant requesting a withdrawal of the corresponding fiat amount may properly be considered commingled and property of the estate under the Distribution Opinion (D.I. 1085).
Specifically, Defendant concedes the following cumulative balance that was swept without any corresponding withdrawal request:
- $3,682.33 USD (final cumulative balance after all prior activity)
This concession is made to clearly delineate the line between funds that were swept before any withdrawal request and the specific withdrawals at issue in this case ($41,215.52, $49,434.39, and $19,960.05), all of which were requested and received prior to any sweep of the corresponding USDC. Defendant maintains that these three withdrawals are factually distinguishable and not avoidable.
NOTE: This is not a concession that the Defendant owes the Plaintiff $3,682.33. Defendant concedes that the court’s Distribution Opinion (D.I. 1085) applies to the $3682.33 USDC swept prior to withdrawal request by the Defendant.
Ordinary Course of Business
Defendant asserts the affirmative defense under 11 U.S.C. § 547(c)(2). This defense protects transfers that were made in the ordinary course of business or financial affairs of the debtor and the transferee, or that were made according to ordinary business terms in the relevant industry. The three USD redemptions at issue were made in the same manner as Defendant’s dealings with Prime Trust — specifically, USDC deposits to a unique Integrator Deposit Address followed by near-simultaneous USD withdrawals to Defendant’s bank account.
Moreover, this exact pattern of depositing USDC and immediately requesting and receiving USD fiat was (and remains) standard industry practice on major platforms, as demonstrated by Defendant’s contemporaneous Gemini account activity set forth below. These facts establish both the subjective and objective prongs of the ordinary course of business defense, rendering the transfers non-avoidable.
Gemini Account – Ordinary Course of Business Examples
These examples demonstrate the consistent industry practice of depositing USDC and immediately converting to USD and withdrawing fiat — the same pattern used with Prime Trust.
Example 1 – April 17, 2023 (Same-Day Redemption)
USDC Deposit – Apr-17-2023 19:59:11 UTC – 50,000.31 USDC
Sell USDC for USD – Apr-17-2023 21:00–21:02 UTC – ~$48,958.87 (after fees)
USD Withdrawal (ACH) – Apr-17-2023 21:02:12 UTC – $48,958.87
Pattern: Deposit → Sell → Withdraw all within ~2 hours
Example 2 – May 5, 2023 (Same-Day Redemption)
USDC Deposit – May-05-2023 17:14:57 UTC – 43,252.03 USDC
Sell USDC for USD – May-05-2023 17:21:04 UTC – $42,351.93 (after fees)
USD Withdrawal (ACH) – May-05-2023 17:21:38 UTC – $42,351.93
Pattern: Deposit → Sell → Withdraw within ~7 minutes
Example 3 – May 15, 2023 (Large Same-Day Redemption)
USDC Deposit – May-15-2023 17:07:29 UTC – 127,579.26 USDC
Sell USDC for USD – May-15-2023 17:08:12–17:08:50 UTC – $124,924.01 (after fees)
USD Withdrawal (ACH + Wire) – May-15-2023 17:08:50 & 18:05:39 UTC – $100,000.00 + $24,899.00
Pattern: Deposit → Sell → Full withdrawal same day
Example 4 – June 27, 2023 (Same-Day Redemption)
USDC Deposit – Jun-27-2023 13:06:57 UTC – 46,222.78 USDC
Sell USDC for USD – Jun-27-2023 13:36:24 UTC – $45,260.78 (after fees)
USD Withdrawal (ACH) – Jun-27-2023 13:38:10 UTC – $45,260.78
Pattern: Deposit → Sell → Withdraw within ~31 minutes
Example 5 – July 12, 2023 (Same-Day Redemption)
USDC Deposit – Jul-12-2023 19:27:10 UTC – 54,277.97 USDC
Sell USDC for USD – Jul-12-2023 19:31:53 UTC – $53,201.82 (after fees)
USD Withdrawal (ACH) – Jul-12-2023 19:32:14 UTC – $53,201.81
Pattern: Deposit → Sell → Withdraw within ~5 minutes
Summary: These Gemini transactions show the exact same ordinary course of business pattern used with Prime Trust: deposit USDC to a deposit address, immediately sell for USD, and withdraw fiat to a bank account — often within minutes or the same day. This practice was routine and consistent across multiple platforms in 2023.
Order Exceptions
The Court has already recognized that its ruling on commingling in the Distribution Opinion (D.I. 1085, entered July 18, 2025) is not universal. Prior to entry of the Distribution Opinion, the Plan Administrator submitted a revised proposed order that specifically carved out a group of “Reserved Parties.” The Court expressly stated:
“By agreement of the parties, the Reserved Parties’ rights are not being adjudicated herein.”
“The foregoing order, adjudication, and decree in Paragraph 2 shall not apply to any Currency allegedly transferred by, to or for the benefit of the Reserved Parties.”
The Reserved Parties expressly carved out by the Court include:
- Zap Solutions, Inc. (d/b/a Strike) and any affiliate, insider, mediate or immediate transferee, or any person for whose benefit a transfer was made;
- Digital Asset Redemption, LLC;
- SDM, Inc.; and
- Electric Solidus, Inc. f/k/a Electric Solidus, LLC d/b/a Swan Bitcoin, including its customers.
This demonstrates that the Court has already accepted that the general commingling findings do not apply in every circumstance and that specific facts or parties may be treated differently. Defendant’s three transfers are factually distinguishable from the general ruling and fall squarely within the type of exception the Court has already made.
Statement
For the foregoing reasons, the three specific transfers at issue ($41,215.52, $49,434.39, and $19,960.05) are factually distinguishable from the general commingling findings in the Distribution Opinion (D.I. 1085). Defendant has demonstrated a clear, one-to-one audit trail showing that the USD redemptions were requested and received prior to any sweep of the corresponding USDC from the unique Deposit Address assigned to Coast Software.
Defendant concedes only the $3,682.33 cumulative balance that was swept without any corresponding withdrawal request.
The transactions followed the exact ordinary course of business pattern routinely used by Defendant on other major platforms, as shown in the Gemini examples above. Because the Court has already carved out exceptions for similarly situated parties in D.I. 1085, the same equitable treatment should be afforded here. Accordingly, the transfers are not avoidable and the complaint should be dismissed.
Implications
This analysis was performed using freely available public blockchain data. Every avoidance Defendant can do this same analysis and presumably some will be able to show that their funds were returned prior to being commingled.
Thank you,
Timothy Howard (Defendant)