Nevada's Financial Institutions Division has filed to take over crypto custodian Prime Trust and freeze all of its businesses, following a cease-and-desist order alleging the company was near insolvency. Prime Trust owes its clients over $85 million in fiat and $69.5 million in crypto, and is operating with a $12 million equity deficit. The filing asks for a court to ban Prime Trust and its officers from disposing of any assets or conducting any transactions. The company's board and interim CEO have signed off on the petition. Fireblocks, which manages Prime Trust's crypto assets, said no funds held by it are in limbo.
Crypto custody firm Prime Trust has been issued a cease-and-desist order by the Nevada Department of Business and Industry's Financial Institutions Division (FID) due to a "shortfall in customer funds" and a "considerably deteriorated" financial condition. The FID alleges that Prime Trust breached its fiduciary duties and failed to safeguard assets under its custody. Prime Trust reported a negative $12 million stockholders' equity position at the end of March 2023. The company can request a hearing within 30 days of the order, or the order will be deemed final.
Cryptocurrency custodian BitGo has cancelled its acquisition of rival Prime Trust after "considerable effort and work to find a path forward with Prime Trust." Prime Trust has been losing clients and deposits to competitors for weeks amid mounting concerns over its business. BitGo was almost bought by Galaxy Digital until the $1.2bn deal was cancelled in August.
