Prime Trust Needs to be Placed in Receivership: Nevada Regulator

• The Nevada Financial Institutions Division filed a petition to place Prime Trust in receivership
• The regulator issued a cease-and-desist order against the crypto custodian on June 21
• The firm agrees with the petition due to the “substantial deficit between its assets and liabilities.”
• The petition states that the crypto custodian is “operating in an unsafe and unsound manner.”

The Nevada Financial Institutions Division has filed a petition with the Eighth Judicial District Court of Nevada to put crypto custodian and digital asset infrastructure provider Prime Trust in receivership after the regulator issued a cease-and-desist order against the firm on June 21 claiming that its financial condition had “considerably deteriorated.” The regulator has asked the court to appoint a receiver as well

In the petition filed by the Nevada regulator in the district court on June 26, the Financial Institutions Division asked for a temporary restraining order and an order appointing a receiver to Prime Trust Technologies, including the firm’s crypto business. On the other hand, the crypto firm has agreed to be placed into receivership because of the “substantial deficit between its assets and liabilities.”

The Nevada regulator asked the court to make an immediate appointment of Prime Trust with a receiver, stating that there is a risk of “irreparable harm” to customers, the public, and “confidence in the emerging market of cryptocurrency,” while adding that the company “is in an unsafe financial condition and/or is insolvent.” The regulator believes that the firm’s condition “will only progressively worsen as customers continue to withdraw,” said the petition

Nevada Financial Institutions Division files a petition to place Prime Trust LLC in receivership with the Eight Judicial District Court of Nevada. Read the full release and find a copy of the petition here: pic.twitter.com/78vaHKrhPu

— Nevada Department of Business & Industry (@NevadaDBI) June 27, 2023

A press release shared by the regulator via its official account on social media platform Twitter confirmed the news while noting that the crypto custodian is “operating in an unsafe and unsound manner.”

“The petition asks the court to appoint a receiver to take over the day-to-day operations of the company and thoroughly examine all its finances to determine the best option to protect Prime’s clients, either by rehabilitating and returning the company to private management or by liquidating the company,” read the release.

The Nevada regulator noted that Prime Trust owes its clients around $85 million but only has $2.9 million

As reported earlier by Bitnation, popular crypto custodian BitGo stated that it would acquire Prime Trust and revealed that it had signed a term sheet with the parent company of the crypto infrastructure provider. However, the acquisition was terminated due to rumors of the firm’s bankruptcy.

BitGo CEO Mike Belshe confirmed that his firm had other acquisitions pending that would be announced in the next six months in an interview with CoinDesk.