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Nevada’s Financial Institutions Division took over the troubled cryptocurrency company Prime Trust. That came as the latter stared at a substantial deficit, alleging that it lost access to various cryptocurrency wallets in 2021.
Prime Trust’s significant deficit
Several renowned platforms, including Binance US, previously used Prime Trust as their financial infrastructure provider. Meanwhile, the receivership request (filed in Nevada) shows Prime Trust owes its customers more than $85.6 million, but it only has around $2.9 million available.
Moreover, further updates indicate the troubled firm owes its customers crypto worth $69.5 million but can only afford $68 million.
Nevada’s FID move comes a few days after cryptocurrency platform BitGo suspended its deal to acquire Prime Trust. Also, it follows the state’s cease & desist order, alleging that the struggling company is about to go bankrupt.
The state filing indicated that the digital asset custodian operated with an equity deficit of $12 million. It added that losing the legacy cryptocurrency wallets contributed to Prime Trust’s shortfalls.
FID and Prime Trust requested the receivership
The filing revealed that the Financial Institutions Division and Prime Trust asked for the receivership. Moreover, it requested pilot injunctive relief, considering the impending threat of irreparable harm.
Also, the filing has proposed a ban on anyone associated with Prime Trust, including stakeholders, directors, and officers, from conducting transactions or disposing assets on behalf of the troubled company.
Nevada Commissioner Sandy O’Laughlin signed an affidavit that shows Prime Trust and FID agreed Bank of Nevada Chief John Guedry, Arvind Menon (former Meadows Bank), or Meadows Bank’s Paul Huygens could be potential receivers.
The post Nevada’s FID places embattled crypto company Prime Trust in receivership appeared first on Invezz.
