According to an official press release dated June 27, Nevada regulators have filed a petition to place Prime Trust LLC in receivership.
The Nevada Financial Institutions Division (NFID) said it had asked the courts to appoint a trustee to take over Prime Trust’s day-to-day operations. After investigating the company, the trustee can return Prime Trust to private management or liquidate the company.
Supervisor is looking for restrictions
The NFID also called for restrictions that would prevent Prime Trust members from accessing and moving company funds. The trustee would acquire Prime Trust’s property and assets and would be able to take all necessary action in connection with the proceedings.
The text of the filing further notes that Prime Trust has filed for suspension of payments and that a hearing must be held within 15 days.
The current action follows an earlier cease and desist order from the NFID on June 23. There, the regulator said Prime Trust could not meet customer withdrawals. At the time, it ordered the company to stop accepting fiat currency and cryptocurrency.
Prime Trust’s current financial situation
Regulators said Prime Trust lost access to certain “Legacy” cryptocurrency wallets in December 2021, but the company continued to buy cryptocurrency to meet customer withdrawals. The company still does not have access to those portfolios.
The NFID also stated that Prime Trust had seen more shootings. Both factors led to its failure to meet withdrawals.
Prime Trust currently has a fiat deficit of $82.8 million. Despite owing $85.7 million to customers, it only has $2.9 million on hand. It also has a smaller cryptocurrency deficit of $861,000 as it owes $69.5 million in crypto to customers but has $68.6 million on hand.
For reasons that are unclear, Prime Trust seems to have a large number of Audius (AUDIO) tokens. Arkham Intelligence reported that the company owns $61 million in AUDIO, representing 31% of its AUDIO offering and outweighing all of its other assets.
The message Nevada is asking to put Prime Trust into receivership reports that a shortfall of $82 million first appeared on CryptoSlate.