Prime Trust cannot fulfill withdrawals, must stop accepting funds: Nevada C&D order Prime Trust cannot fulfill withdrawals, must stop accepting funds: Nevada C&D order
Regulators monitored the company's solvency prior to its failed acquisition by BitGo.
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Updated: Jun. 27, 2023 at 8:31 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Financial regulators in Nevada issued a cease and desist order against Prime Trust on June 21 after monitoring the company for solvency.
In an email to CryptoSlate, the Nevada Financial Institutions Division (NFID) said it monitored the solvency of Prime Trust prior to a possible acquisition or merger.
BitGo was expected to acquire Prime Trust before it abandoned the deal on June 22.
The NFID said that Prime Trust failed to safeguard assets under custody and could not fulfill client withdrawals. It said that its cease and desist order will prevent Prime Trust from accepting fiat currency and crypto from current and new clients.
The cease and desist order itself states that Prime Trust’s financial state has “deteriorated to a critically deficient level.” It says that the firm is now in an “unsafe and unsound condition” and is “at a substantial deficit and/or is insolvent.”
Furthermore, it says that Prime has “materially and wilfully” breached its duties to clients. Prime Trust has 30 days to request an administrative hearing.
Stablecoin firm Stably also said that it would pause minting and user withdrawals today as a result of the incident. It relied on Prime Trust as a custodian.
Update — June 27: Nevada has filed to put Prime Trust into receivership, requesting permission to impound its assets and documents, according to Bloomberg Law.
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Posted In: Bankruptcy, Regulation
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Mike Dalton
Before transitioning to crypto writing in 2018, Mike studied library and information sciences. Currently, he resides on Canada's West Coast.
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Stably
Stably is a fast growing FinTech company from Seattle founded in 2018 by a team of former bankers and Amazon software engineers.