Nevada Financial Institutions Division Takes Further Action Against Prime Trust
After filing a cease and desist order, the Nevada Financial Institutions Division has taken further action against crypto custodian Prime Trust by requesting the appointment of a receiver.
In a June 26 submission, the regulator asked the Eighth Judicial District Court of Nevada to issue a temporary restraining order and to appoint a receiver to Prime Trust Technologies, including its crypto custodial division. As a result of a “significant deficit between its assets and liabilities,” both Prime Trust and the regulator have consented to the receivership.
The petition demanded an immediate appointment, warning of the potential for “irreparable harm” to customers, the public, and “trust in the burgeoning cryptocurrency market”:
The Financial Institutions Division’s filing alleged that Prime Trust employed Fireblocks to store its crypto assets in 2019 and experienced a shift in leadership in 2020. Due to certain restrictions with Fireblocks, Prime Trust reintroduced legacy wallet forwarding addresses to its customers in January 2021. Since December 2021, Prime Trust has not had access to its users’ legacy wallets, and it has purchased crypto with customer funds.
TrueUSD guarantees that its users are not exposed to the difficulties associated with Prime Trust.
BitGo Cancels Purchase of Prime Trust Following Cease and Desist Order
The petition stated that Prime Trust was liable for over $85 million in fiat to its customers, however, they only had around $2.9 million at the time of filing. The Nevada regulator also noted that the firm was responsible for more than $69.5 million in digital assets, while only having around $68.6 million in their possession.
On June 22, BitGo, a wallet infrastructure provider and digital asset custodian, declared that it was cancelling its purchase of Prime Trust following the Nevada regulator’s issuance of a cease and desist order on June 21. The order stated that Prime Trust’s financial situation had “considerably worsened” and that it was “unable to meet customer withdrawals due to a lack of customer funds.”
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