Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesCopyBotsEarn
Prime Trust Is Having a Bad Month

Prime Trust Is Having a Bad Month

CoindeskCoindesk2023/06/29 18:46
By:Coindesk

The crypto custodian has been ordered to halt operations while its regulator looks to take it over.

Prime Trust may be taken over by the state of Nevada, and the situation seems alarming.

You’re reading State of Crypto, a CoinDesk newsletter looking at the intersection of cryptocurrency and government. to sign up for future editions.

Prime Trust owes customers more than $80 million in cash that it doesn’t have, court filings this week showed.

Prime Trust, a storied crypto custodian, is only the latest digital asset firm to acknowledge financial issues and face a takeover. But as a custody provider, it occupies a unique space among the various bankruptcies we’ve seen so far.

On June 8, 2023, my colleague Ian Allison reported that BitGo, a crypto custodian that’s in the past, , a fellow custody provider.

On June 22, i.e. two weeks later, from this deal.

That same day, rumors emerged that the state of Nevada had filed , which the state later confirmed by publishing an order which alleged it had a massive deficiency of customer funds and indeed may be insolvent.

Four days after that, the state of Nevada took things a step further, (basically asking for court approval to take over the company) and alleging that Prime Trust a) owed clients about $82 million in fiat that it didn’t have access to and b) lost access to certain crypto wallets in 2021 and so was using customer fiat funds to buy crypto to meet withdrawal requests.

This filing, which was made public on Tuesday, is pretty alarming. It’s got sign-off from Prime Trust’s interim CEO and board, indicating the company is cooperating with the state Financial Institutions Division.

It’s also worth noting that Prime Trust has changed leadership a few times since its founding. The allegations indicate that the custodian used wallets it lost access to in 2021, prior to the current interim CEO’s appointment.

Still, this appears to be the first time these revelations are being publicly disclosed, and the implications are serious.

One of these implications ties to the possible impact to TrueUSD, a stablecoin whose issuer said on June 22 it had “” to Prime Trust before later acknowledging it had a relatively small amount ($26,000) on the custodian.

Rumors that TrueUSD use Prime Trust to mint and redeem tokens have persisted though, and on on Wednesday.

Lawmakers are already paying attention to stablecoin issues, and a bill addressing this sector of the crypto industry is still the most likely to pass through the House before other legislation, so I imagine Congress will take notice if one of the world’s largest stablecoins continues to have issues.

And regulators will of course be paying attention to issues by a regulated custodian.

CoinDesk - Unknown

Monday

Wednesday

If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at or find me on Twitter .

You can also join the group conversation on .

See ya’ll next week!

53

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Locked for new tokens.
APR up to 10%. Always on, always get airdrop.
Lock now!

You may also like

6 Reasons XRP Price Could Hit $1 This Summer (Opinion)

Many are wondering if XRP can reach $1 anytime soon. Well, here are a few reasons in support.

Cryptopotato2024/07/21 16:55