Nevada financial regulator petitions court to place Prime Trust into receivership
Following the filing of a cease and desist order, Nevada’s Financial Institutions Division has again moved against crypto custodian Prime Trust by petitioning for the appointment of a receiver.
In a June 26 filing, the regulator petitioned the Eighth Judicial District Court of Nevada for a temporary restraining order and order appointing a receiver to Prime Trust Technologies, which would include its crypto custodian arm. Prime Trust has stipulated to the receivership along with the regulator based on the “substantial deficit between its assets and liabilities”.
The petition called for an immediate appointment, claiming there was a risk of “irreparable harm” to customers, the public, and “confidence in the emerging market of cryptocurrency”:
Nevada Financial Institutions Division files a petition to place Prime Trust LLC in receivership with the Eight Judicial District Court of Nevada. Read the full release and find a copy of the petition here: https://t.co/1A1NzChBGx pic.twitter.com/78vaHKrhPu
The Financial Institutions Division’s filing included claims that Prime Trust contracted Fireblocks to store all its crypto assets in 2019, and underwent a change in management in 2020. The custodian reintroduced legacy wallet forwarding addresses to customers in January 2021 "because of limitations" with Fireblocks. Prime Trust has not had access to its users’ legacy wallets since December 2021, and purchased crypto using customer funds.
Related: TrueUSD assures users it has no exposure to troubled Prime Trust
According to the petition, Prime Trust owed more than $85 million to its clients in fiat, but had only roughly $2.9 million as of the filing. The Nevada regulator said Prime Trust’s liability in digital assets was
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