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Friday, July 19, 2024

Prime Trust Placed In Receivership by Nevada’s Regulator

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The Nevada Financial Institutions Division filed a court petition to place Prime Trust (a provider of financial infrastructure for fintech and crypto firms) in receivership due to operating in an “unsafe and unsound manner.”

Prime Trust was once a leading participant in the digital asset sector, holding funds on behalf of fallen giants such as FTX and Celsius Network.

  • The petition comes a week after the regulator issued a cease and desist order on Prime Trust, alleging it has a severe liquidity crack and can not honor customer withdrawals.
  • According to the latest filing, the firm owes over $85 million in fiat currency to clients but has only $2.9 million. In addition, it has $69.5 million worth of crypto debt, whereas its digital asset holdings equal $68.6 million.

“With consideration of the above, Prime is in an unsafe financial condition and/or is insolvent. Additionally, PRIME’s condition will only progressively worsen as customers continue to withdraw from Prime,” the agency alleged.

  • A receivership is a method that helps creditors in recovering their sums and could benefit distressed organizations to avoid filing for bankruptcy protection.
  • Prime Trust’s problems seem to have backed off BitGo from an acquiring deal. The latter revealed intentions to put the troubled company under its umbrella but halted such plans last week.

“After considerable effort and work to find a path forward with Prime Trust, BitGo has made the hard decision to terminate the acquisition of Prime Trust. This decision was not made lightly, and BitGo remains committed to our mission to deliver trust in digital assets,” BitGo stated.

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