Cryptocurrency Custodian Prime Trust Files for Chapter 11 Bankruptcy

Prime Trust Files for Chapter 11 Bankruptcy Protection

Las Vegas-based cryptocurrency custodian Prime Trust has filed for Chapter 11 bankruptcy protection. The company had previously been placed into receivership by Nevada regulators, who found it to be insolvent. Prime Trust’s troubles began when rival custodian BitGo backed out of a deal to acquire the company. A subsidiary of Prime Trust, called Banq, also filed for bankruptcy due to alleged mismanagement. Additionally, Prime Trust partner Abra faced a cease and desist order in Texas. The Nevada Financial Institutions Division moved to shut down Prime Trust’s operations, citing breaches of fiduciary duties. Prime Trust owed over $82 million to customers, despite having $68 million in digital assets under custody. Prime Trust plans to evaluate options, including a possible sale of its assets.

Key Points:

Prime Trust files for Chapter 11 bankruptcy protection following placement into receivership by Nevada regulators.
Rival custodian BitGo backs out of deal to acquire Prime Trust.
Prime Trust subsidiary Banq files for bankruptcy due to alleged mismanagement.
Prime Trust partner Abra faces cease and desist order in Texas.
Nevada Financial Institutions Division shuts down Prime Trust’s operations, citing breaches of fiduciary duties.

Hot Take:

Prime Trust’s bankruptcy filing marks a significant setback for the troubled cryptocurrency custodian. With a string of difficulties over the past year, including failed acquisition attempts and regulatory issues, finding a buyer may prove challenging. The company’s bankruptcy filing aims to facilitate an evaluation of strategic alternatives, but it likely signals the end of Prime Trust as a major player in the cryptocurrency custodial services industry.