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The Nevada Financial Institutions Division has submitted a court petition to place Prime Trust (a provider of financial infrastructure for fintech and cryptocurrency companies) into receivership due to its operation in an “unsafe and unsound manner.”
Prime Trust was previously a prominent player in the digital asset industry, managing funds for notable entities such as FTX and Celsius Network.
- The petition follows a cease and desist order issued by the regulator against Prime Trust, claiming it is experiencing a significant liquidity issue and is unable to fulfill customer withdrawal requests.
- As per the most recent filing, the company owes clients over $85 million in fiat currency while possessing only $2.9 million. Additionally, it has $69.5 million in crypto liabilities, whereas its digital asset holdings amount to $68.6 million.
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“Considering the aforementioned, Prime is in an unsafe financial state and/or is insolvent. Furthermore, PRIME’s situation is expected to deteriorate further as customers continue to withdraw from Prime,” the agency asserted.
- A receivership serves as a mechanism that aids creditors in recovering their funds and may assist distressed companies in avoiding bankruptcy protection.
- Prime Trust’s difficulties appear to have caused BitGo to withdraw from a potential acquisition. The latter had expressed interest in bringing the troubled firm under its management but suspended those plans last week.
“After extensive effort and work to identify a viable path forward with Prime Trust, BitGo has made the difficult decision to terminate the acquisition of Prime Trust. This choice was not made lightly, and BitGo remains dedicated to our mission of fostering trust in digital assets,” BitGo remarked.
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