The Nevada regulator has ordered Prime Trust to cease its operations following its inability to fulfill customer withdrawal requests. The decision came shortly after BitGo, a rival company, announced its decision to abandon its plans to acquire Prime Trust. The Nevada Financial Institutions Division released an order on its website, stating that Prime Trust‘s financial condition had significantly deteriorated to a critically deficient level.
The company was unable to meet withdrawal requests due to a shortfall of customer funds. The agency further emphasized that Prime Trust had breached its fiduciary duties to customers by failing to safeguard the assets under its custody.
BitGo made a Twitter announcement earlier in the day revealing that despite their extensive efforts to find a way forward, they had made the difficult choice to terminate the acquisition of Prime Trust. Details of the potential acquisition were not disclosed. Still, it would have provided BitGo access to Prime Trust‘s banking connections and wealth-management offerings, including a system for U.S. individual retirement accounts to invest in cryptocurrencies.
Fiat onramp service Stably, which relies on Prime Trust as its regulated custodian, said earlier in the day that it was forced to pause some services and operations due to Prime Trust freezing withdrawals and deposits.
In June 2022, Prime Trust raised $107 million in capital at an undisclosed valuation. However, the company has faced numerous challenges over the past eight months, including replacing CEO Tom Pageler in November and significant staff layoffs in January. It also ceased operations in Texas during that time. Its payments subsidiary, Banq, filed for bankruptcy protection recently.
