Crypto custodian Prime Trust has deficiency of over $82 million in fiat currency
- Nevada’s financial regulator moved to court to appoint a receiver for Prime Trust
- The crypto custodian has serious deficiencies in funds in terms of its fiat holdings
Crypto custodian – Prime Trust – continues to be in uncertain waters ever since it suspended withdrawals under the orders of the Nevada regulator. Now, the Nevada Financial Institution Division has moved to court to appoint a receiver for the crypto custodian. The regulator claims the crypto entity has insufficient funds, mainly because it lost control of its legacy wallets in 2021.
Additionally, the regulator stated that Prime Trust used customer funds to buy more digital currency in order to match the withdrawals. The funds to purchase crypto came from omnibus customer accounts. The filing also said, “PRIME is reported to have been making efforts to regain access to the Legacy Wallets. However, as of the date of this Petition, PRIME has been unable to do so.”
Prime Trust has millions missing in fiat
Furthermore, the petition claims that crypto custodian owes customers $85,670,000 in fiat currency but has about $2,904,000 in its accounts. This puts a difference of over $82 million for its fiat currency. In terms of crypto, the platform owes customers $69,509,000 but has $68,648,000, a deficiency of $861,000. The regulator further said,
“With the consideration of the above, PRIME is in an unsafe financial condition and/or is insolvent. Additionally, PRIME’s condition will only progressively worsen as customers continue to withdraw from PRIME”
Additionally, the Nevada financial regulator also asked the court to stop the platform and its employees from withdrawing or disbursing funds from its accounts immediately.
Notably, Prime Trust halted its withdrawals and deposits service on 23 June 2023, after the order from the Nevada regulator. The halt in these services also resulted in the suspension of services on the crypto exchange, Stably. In its cease and desist letter, the regulator claimed that the crypto custodian was “operating at a substantial deficit and/or is insolvent.”
Furthermore, prior to the company revealing the regulator’s order, BitGo – a leading crypto custodian – announced that it would drop its plan to acquire Prime Trust. BitGo had signed a non-binding contract with Prime Core Technologies on June 8th, 2023. But, the deal fell through “after considerable effort and work to find a path forward with Prime Trust,” the firm said.