- Prime Trust has been ordered into receivership by a Nevada court after a catastrophic loss of customer funds and alleged misuse of funds
- Authorities filed for receivership in June due to Prime Trust’s near insolvency
- Prime Trust owes clients $155 million but only has $70 million or so in assets
Prime Trust has been ordered by the Eighth Judicial District Court of Nevada to be put into receivership following its catastrophic loss of customer funds. The state’s regulatory authorities issued the order this week, compelling the company to halt all activities due to a significant shortfall in customer funds and allegations of misusing customer funds to meet withdrawal requests. As a result of the receivership order the company’s operations will be taken over by John Guedry, the president of Bank of Nevada, according to the filing.
$155 Million Owed to Customers
In June, Nevada’s regulatory authority filed to take over Prime Trust and freeze its business operations, citing allegations of near insolvency, with the move coming shortly after crypto custodian BitGo terminated its planned acquisition of Prime Trust. The request for receivership confirms that Prime Trust owes its clients more than $85 million in fiat currency but only holds approximately $3 million in fiat currency. Additionally, the company owes its customers a staggering $69.5 million in cryptocurrencies while possessing around $68.6 million in crypto assets.
The loss came about because in 2021 Prime Trust lost access to some of its crypto wallets containing customer bitcoin and attempted to buy them back with incoming funds, relying on deposits to fund withdrawals for a time.
Receiver Takes Control
The receivership order is a significant development for Prime Trust and its customers, as the court-appointed receiver assumes control to address the financial issues and safeguard the interests of the company’s stakeholders during this challenging time.
The court filing submitted to Nevada’s Department of Business and Industry Financial Institutions Division reveals that Prime Trust’s overall financial condition has severely deteriorated, leaving the company in an “unsafe or unsound condition to transact business,” hence the need for such tough measures.