Crypto

Cryptocurrency custodian Prime Trust files for bankruptcy

The writing was already on the wall, but the company confirmed it’s going bust

Prime Trust, a crypto custodian, has filed for Chapter 11 bankruptcy protection in Delaware after a recent shortfall in customer funds. According to a filing on August 15, the company has between 25,000 and 50,000 creditors, with estimated liabilities of between $100 million and $500 million, more than its estimated assets of  $50 million to $100 million.

“The Company intends to file a number of motions with the Bankruptcy Court designed to facilitate the Company’s orderly evaluation of all strategic alternatives, including potentially a sale of the Company’s assets and operations,” said Prime Trust in a press release. It also expects the motions to include requests to resume paying wages and benefits to employees.

Prime Trust’s top unsecured creditors have approximately $105 million in claims, including the biggest declaration of $55 million. Prime Core Technologies Inc., Prime Trust, LLC, Prime Digital LLC, and Prime IRA LLC were all documented in the filing for Chapter 11 relief.

Nevada’s business regulator issued Prime Trust a cease and desist order on June 21, stating its financial condition was “critically deficient” and could not honor customer withdrawals. On June 26, the regulator petitioned the court to put the company into receivership, which was approved on July 18.

Prime Trust agreed to the petition based on a “substantial deficit between its assets and liabilities.” It owed over $85 million in fiat to its clients when the petition was filed while only holding about $2.9 million. The company had less in digital liabilities, owing roughly $69.5 million in crypto while maintaining about $68.6 million.

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