The Nevada Financial Regulator Is Asking the Court to Place Prime Trust Under Receivership
The filing revealed that Prime Trust had more than $82 million in fiat and $800,000 in financial obligations to its users.
After the Financial Institutions Division of Nevada filed a cease-and-desist order against Prime Trust, it filed a petition to be appointed as bankruptcy trustee.
On June 26, regulators filed a motion in the Nevada Eighth Judicial District, seeking an injunction and court order appointing Prime Trust Technologies as trustee, including its crypto custodian. Prime Trust and the regulator have approved receivership based on a “significant” shortfall between Prime’s assets and liabilities.
The petition called for the immediate appointment of an insolvency practitioner due to an alleged “risk of irreparable harm” to customers, the public and “trust” in the cryptocurrency market.
Prime is either insolvent or its financial condition is deteriorating. Prime’s situation will also worsen as more and more customers turn away from Prime.
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The Financial Institutions Division filing included allegations that Prime Trust hired Fireblocks to store all of its crypto assets in 2019 and made a change in management in 2020. The custodian introduced a legacy wallet forwarding address for customers in January 2020 “due to restrictions on fireblocks”. Prime Trust has not had access to its users’ old wallets since December 2021. It bought crypto with customer funds. TrueUSD assures Prime Trust users that it is not involved in the troubled Prime Trust.
Prime Trust has been hit by a financial crisis. The petition states that Prime Trust owed its clients more than $85,000,000 in fiat currencies but only had $2.9 million at the time of filing. Nevada regulators said Prime Trust had reduced but still significant liability for digital assets: The company owed over $69.5 million in cryptocurrencies but held about $68.6 million.
These legal actions were initiated after the Nevada regulator issued a cease and desist order on June 21, alleging that Prime Trust’s financial condition had “deteriorated significantly” and that the company was “unable to to settle customer withdrawals due to a deficiency”. of customer funds.” On June 22, BitGo, a provider of wallet infrastructure and custodian of digital assets, announced its intention to call off its acquisition of Prime Trust.
