Crypto Firm Prime Trust Placed Into Receivership
Nevada's Financial Institutions Division (FID) has taken control of crypto custodian Prime Trust, halted its operations, and is seeking a receiver for the firm, according to an announcement made by the regulator on Tuesday.
The receivership request filed in Nevada on Tuesday states that Prime Trust, which was previously a financial infrastructure provider for Binance US and others, owes its clients more than $85 million in fiat currency, with only $3 million available on hand.Additionally, the company owes $69.5 million in crypto and holds $68.6 million in crypto assets.
This move from Nevada's FID comes only days after custodian BitGo withdrew its bid to acquire Prime Trust.It also follows a cease-and-desist order issued by the state, which claimed that Prime Trust was on the verge of insolvency.
Even more troubling, the filing reveals that Prime Trust is operating with a $12 million equity deficit and is facing challenges accessing some of its crypto wallets. While Prime Trust had entered into an agreement with Fireblocks to manage its crypto assets in 2020, new management reverted back to a legacy wallet management system in January 2021. It was then discovered in December 2021 that Prime Trust was unable to access these legacy wallets and the cryptocurrencies held within them.
While Prime Trust was unable to access these wallets, it is alleged the firm used its clients' fiat currency accounts to purchase crypto to be used for processing crypto-denominated withdrawals.
Prime Trust's efforts to regain access to crypto wallets, while still ongoing, have been unsuccessful. The receivership aims to appoint a receiver to oversee Prime Trust's operations, examine its finances, and determine the best course of action to
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