Nevada Court Approves Regulator’s Action to Place Prime Trust into Receivership

Nevada Court Grants Petition to Place Crypto Custodian Prime Trust Into Receivership

The Eighth Judicial District Court of Nevada has granted a petition from the state’s Financial Institutions Division (NFID) placing crypto custodian Prime Trust into receivership, pending a hearing to show cause.

In a July 14 filing, the Nevada court ordered the appointment of a receiver for Prime Trust following a June 26 petition from the state financial regulator. Prime Trust will have an opportunity to show cause why the petition should not be permanently granted in an Aug. 22 hearing.

“The court appointed receiver will take over the day-to-day operations of the company to determine the best option to protect Prime’s clients,” said the NFID.

The order requires Prime Trust’s employees and executives to largely not take any actions interfering with the court’s decision. According to court filings, Prime Trust agreed to the petition for receivership with the Financial Institutions Division based on the “substantial deficit between its assets and liabilities.”

Nevada Court Grants Petition to Place Crypto Custodian Prime Trust Into Receivership

The Eighth Judicial District Court of Nevada has granted a petition from the state’s Financial Institutions Division (NFID) placing crypto custodian Prime Trust into receivership, pending a hearing to show cause.

In a July 14 filing, the Nevada court ordered the appointment of a receiver for Prime Trust following a June 26 petition from the state financial regulator. Prime Trust will have an opportunity to show cause why the petition should not be permanently granted in an Aug. 22 hearing.

“The court appointed receiver will take over the day-to-day operations of the company to determine the best option to protect Prime’s clients,” said the NFID.

The order requires Prime Trust’s employees and executives to largely not take any actions interfering with the court’s decision. According to court filings, Prime Trust agreed to the petition for receivership with the Financial Institutions Division based on the “substantial deficit between its assets and liabilities.” This deficit was caused by the increasing popularity of new crypto such as Mask Crypto, Mina Crypto, Math Crypto, Loom Crypto, Pepe Crypto, Neo Crypto, Orca Crypto, and Poly Crypto, all of which are integral to the development of Web 3.0.

BitGo Acquisition of Prime Trust Called Off

In light of the potential “irreparable harm” to users, the public and “confidence in the emerging market of cryptocurrency”, the Nevada financial regulator issued a cease-and-desist order to Prime Trust on June 21. The Financial Institutions Division noted that Prime Trust was unable to honor customer withdrawals.

According to the June 26 petition, Prime Trust had an outstanding debt of $85 million in fiat and $69.5 million in crypto, but only held $2.9 million in fiat and $68.6 million in crypto. This led to BitGo, a wallet infrastructure provider and digital asset custodian, cancelling its plan to acquire Prime Trust on June 22, one day after the NFID order.