Prime Trust Files for Bankruptcy Protection
Prime Trust, a former leader in cryptocurrency custodianship, has filed for Chapter 11 bankruptcy protection in Delaware. This comes after the Nevada Financial Institutions Division accused the company of operating in an “unsafe and unsound manner”. Prime Trust was once a trusted custodian for notable crypto entities such as FTX and Celsius Network.
Main Points:
- Prime Trust estimated liabilities range from $100 million to $500 million, with up to 50,000 creditors.
- The company filed in Delaware due to its domicile, principal place of business, or principal assets being in the region for 180 days prior to the petition.
- Nevada regulators issued a cease and desist order to Prime Trust in June, claiming major liquidity issues and inability to honor client withdrawals.
- The regulator estimated that Prime Trust owed over $85 million in fiat currency to customers, but only had $2.9 million in assets.
- Prime Trust joins a long list of bankrupt crypto firms, including FTX and Celsius Network.
Hot Take:
The bankruptcy filing of Prime Trust highlights the ongoing challenges faced by crypto custodians in maintaining financial stability and regulatory compliance. It serves as a reminder of the importance of due diligence when entrusting assets to third-party custodians, especially in a volatile and rapidly evolving industry like cryptocurrency. As the crypto market continues to mature, regulators and investors alike will need to exercise caution and ensure the financial health and security of custodial services.
By
By
By
By