Nevada’s Financial Institutions Division Takes Control of Prime Trust
The Financial Institutions Division (FID) of Nevada has placed crypto custodian Prime Trust into receivership, halting its operations and seeking a receiver for the firm. This move comes after a series of concerning developments within Prime Trust’s operations.
Key Points:
- Prime Trust has only 3.5% of the cash owed to its clients.
- There is a $900,000 shortfall in crypto assets held by Prime Trust.
- BitGo withdrew its bid to acquire Prime Trust recently.
Financial Situation of Prime Trust:
Prime Trust owes its clients over $85 million in fiat currency, with only $3 million available in cash. Additionally, the company has a debt of $69.5 million in crypto assets while holding $68.6 million in crypto assets.
Furthermore, Prime Trust is operating with a $12 million equity deficit and is facing challenges in accessing some of its crypto wallets, leading to concerns over its financial stability.
Operational Challenges and Allegations:
It is alleged that Prime Trust used clients’ fiat currency accounts to purchase new crypto assets for processing withdrawals, as the firm faced difficulties in accessing its crypto wallets. Despite efforts to regain access, the situation remains unresolved.
Receivership and Future Steps:
The receivership request aims to appoint a receiver to oversee Prime Trust’s operations, assess its financial status, and determine the best course of action to safeguard clients’ interests, which may involve rehabilitation or liquidation of assets.
These developments highlight the challenges faced by crypto custodians and the importance of regulatory oversight in the crypto industry.
