Nevada

Prime

The decision to file for bankruptcy comes after <a href="https://financefeeds.com/prime-trust-lays-off-two-thirds-of-staff-as-regulatory-woes-deepen/" rel="noopener noreferrer nofollow">Prime Trust</a> was placed under receivership by Nevada regulators in late June. This step was taken as the regulators deemed the company insolvent and incapable of serving its customers. 
"The Company intends to file a number of motions with the Bankruptcy Court designed to facilitate the Company’s orderly evaluation of all strategic alternatives, including potentially a sale of the Company’s assets and operations," it said in an accompanying press release. 
Per its bankruptcy filing, Prime Trust disclosed having 25,000 to 50,000 creditors and estimated liabilities ranging between $100 million to $500 million. In contrast, its estimated assets fall within the range of $50 million to $100 million. The company intends to make motions requesting the continuation of employee wages and benefits. 
The top five unsecured creditors of <a href="https://financefeeds.com/bitgo-withdraws-from-prime-trust-acquisition-deal/" rel="noopener noreferrer nofollow">Prime Trust</a> have amassed claims totaling $105 million, with the biggest claim amounting to $55 million. The bankruptcy filing is a direct consequence of Nevada's regulatory intervention in June, which included a cease and desist order and the subsequent placement of Prime Trust into receivership. 
Prime Trust's financial situation at the time of the regulatory petition shows a glaring disparity between assets and liabilities. While the company owed over $85 million in fiat currency to its clients, it held a mere $2.9 million in its coffers. In the digital asset realm, Prime Trust's liabilities totaled around $69.5 million, slightly surpassing its holdings of $68.6 million. 
<a href="https://financefeeds.com/prime-trust-returns-17-million-to-crypto-lender-celsius/" rel="noopener noreferrer nofollow">Prime Trust's</a> recent woes are just the tip of the iceberg in a series of setbacks it has faced over the past year. Earlier in June, its subsidiary Banq filed for bankruptcy, attributing its financial downfall to alleged mismanagement under the previous leadership of CEO Scott Purcell. Furthermore, Prime Trust's partner, Abra, faced regulatory turbulence in Texas, including a cease and desist order due to allegations of securities fraud. 
The final blow came when the Nevada Financial Institutions Division (NFID) ordered to shut down Prime Trust's operations. The NFID asserted that Prime Trust had breached its fiduciary responsibilities to clients, thereby violating Nevada trust laws. While the NFID was actively monitoring Prime Trust's solvency in anticipation of a potential merger or acquisition, the company's financial troubles were deemed too dire to warrant continuation. 
Prime Trust counts some of the world’s largest crypto brands such as Swan, Abra, Dapper Labs and Binance US as clients. It also offers services to other crypto exchanges, NFT creators, digital wallets, OTC desks, RIAs, broker-dealers, banks, and neobanks.

Crypto custodian Prime Trust files for bankruptcy, owes $500 million

FinanceFeeds

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