- Nevada’s financial regulator went to court to appoint a trustee for Prime Trust
- The crypto custodian has serious shortfalls in funds in terms of its fiat holdings
Crypto custodian – Prime Trust – is still in uncertain waters since it suspended withdrawals by order of the Nevada regulator. Now the Nevada Financial Institution Division has gone to court to appoint a trustee for the crypto custodian. The regulator claims that the crypto entity is underfunded mainly because it lost control of its legacy wallets in 2021.
In addition, the regulator stated that Prime Trust used customer money to buy more digital currencies to match the withdrawals. The money to buy crypto came from omnibus customer accounts. The filing also said, “PRIME allegedly made an effort to regain access to the Legacy Wallets. However, as of the date of this petition, PRIME has not been able to do so.”
Prime Trust has millions missing in fiat
In addition, the petition claims that crypto custodian owes customers $85,670,000 in fiat currency but has approximately $2,904,000 in its accounts. This makes a difference of more than $82 million to its fiat currency. In terms of crypto, the platform owes customers $69,509,000 but has $68,648,000, a deficit of $861,000. The controller continues said,
“Considering the above, PRIME is in an unsafe financial condition and/or is insolvent. In addition, the condition of PRIME will only worsen as customers continue to withdraw from PRIME.”
In addition, the Nevada financial regulator has also asked the court to prevent the platform and its employees from withdrawing or withdrawing money from their accounts immediately.
Notably, Prime Trust shut down its withdrawal and deposit service on June 23, 2023, following the order of the Nevada regulator. The discontinuation of these services also resulted in the suspension of services on the crypto exchange, Stable. In its cease and desist letter, the regulator claimed that the crypto custodian was “operating at a significant deficit and/or is insolvent.”
Moreover, before the company announced 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 8, 2023. But the deal fell through “after a lot of effort and work trying to find a way forward with Prime Trust,” the company said. said.