The Nevada Department of Financial Institutions has taken legal action against Prime Trust LLC. file a petition in court placing the company in trusteeship; The department cited concerns about Prime Trust’s unsafe and unsound operations and bankruptcy. The move follows a cease and desist order issued on June 21, 2023.
A court filing reveals that the company owes more than $82 million in fiat cash and will no longer have access to what it calls a “legacy” wallet to store cryptocurrencies in 2021.
The petition states:
“In January 2021, PRIME reintroduced certain legacy wallet transfer addresses to its customers (“Legacy Wallets”). It is understood that PRIME did so because of restrictions related to creating new wallets within the Fireblocks platform. PRIME was set to transfer these legacy wallets to the Fireblocks platform, or to wallets accessible on the Fireblocks platform, but around December 2021, PRIME will no longer be able to access the legacy wallets and the cryptocurrencies they contain. is understood to have been found. Until March 2022, to accommodate withdrawals from inaccessible legacy wallets, PRIME will use customer funds from Omnibus customer accounts to purchase additional digital currency to regain access to legacy wallets. reportedly making an effort to For this petition, PRIME was unable to do so. “
In addition to this previously unknown debacle, the petition detailed the company’s “precarious” financial situation:
“In addition to the above, there have been recent reports of an increase in the frequency of customer abandonment from PRIME. Additionally, many of the withdrawals were of high value. Its financial position is understood to be $85.67 million in fiat debt to its customers, but $2,904,000 in fiat currency (equivalent to $82,766,000 in fiat debt) In terms of digital currency, PRIME owes customers $69.509 million, but has only $68.648 million in digital currency, so PRIME will not be able to fulfill all of the withdrawals.”
The department’s petition seeks to appoint a trustee to take over control of Prime Trust’s day-to-day operations and conduct a thorough financial review, according to a statement released. The trustee will then determine the best course of action to protect the company’s customers, which could include rebuilding Prime back into private management or liquidating the company outright. There is
In a statement, the Nevada Department of Financial Institutions emphasized that it cannot provide legal advice or advice to Prime customers. Customers with questions about the impact of this action on their business are encouraged to contact Prime Trust directly. supportfaq@primetrust.com.