Prime Trust subsidiary Banq files for bankruptcy amid BitGo acquisition deal

Banq, the payments subsidiary of crypto custodian Prime Trust, filed for bankruptcy in the United States on June 13th, according to court documents.

Just days after the announcement of a non-binding letter of intent for wallet infrastructure provider and digital asset custodian BitGo to acquire Prime Trust on June 8, this move has been made.

Banq’s bankruptcy filing showed assets of $17.72 million and liabilities of $5.4 million, and mentioned the “unauthorized transfer” of $17.5 million in assets to Fortress NFT Group in addition to the illegal sharing of trade secrets and proprietary information with Fortress.

Reports indicate that Fortress NFT Group was established by the former CEO, CTO, and CPO of Banq, and Banq is presently embroiled in arbitration with Fortress NFT Group concerning these assertions.

The filing taking place shortly after the announcement of the BitGo acquisition of Prime Trust, which is the parent of Banq, raises questions about its potential impact on the agreement.

Should the deal be completed, BitGo will gain the payment rails and cryptocurrency IRA fund of Prime Trust, thus broadening its wealth management services, though the specifics of the agreement were not revealed.

Prime Trust’s Nevada Trust Company will be added to BitGo’s network of trust companies regulated in South Dakota, New York, Germany, and Switzerland. The API infrastructure and exchange network of Prime Trust will be in full alignment with the services provided by BitGo. BitGo declared:

The crypto custody sector is developing quickly, as evidenced by Ripple’s purchase of Swiss digital asset custodian Metaco in May for $250 million.

If the BitGo/Prime Trust agreement is finalized, it arrives at a time when the United States Securities and Exchange Commission has proposed regulations that would make it more difficult for crypto businesses to serve as custodians for their customers’ funds.

A subsidiary of Prometheum has been given FINRA approval for the qualified custody of digital assets.

Prime Trust has been facing difficulty for some time, with reports of it having let go of one-third of its employees in January. Subsequently, it took action to safeguard Binance.US customer funds through a network of collaborating banks after the banking emergency in March.

Last year, a scandal erupted in the U.S. state of Oregon when it was revealed that a $500,000 contribution to the state Democratic Party had come from FTX executive Nishad Singh.

BitGo was almost purchased by Galaxy Digital for a sum of $1.2 billion last year, however, after the agreement was terminated, they took legal action against Galaxy for breaching the acquisition.

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