1 year ago
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Nevada Authorities Order Prime Trust to Stop
On the 21st, the Nevada State Financial Institutions Authority said that the financial situation of Prime Trust, a crypto asset (virtual currency) custody company based in the state, was deteriorating, and that the company received new assets from customers in the custody business. ordered to stop accepting
The Nevada Department of Financial Institutions said it had been investigating Prime Trust’s financial situation since November last year, explaining:
Prime Trust’s financial condition has deteriorated significantly, making it unsafe or unhealthy to do business.
On June 21, 2023, we were unable to meet the withdrawal of customer funds due to insufficient funds due to significant liabilities existing on our balance sheet.
In addition, Prime Trust has intentionally breached its fiduciary duty to its clients, has failed to keep assets in custody safely, and has been unable to respond to all client withdrawal requests. He continued saying he couldn’t. He also commented that he violated the Nevada trust law.
He also said that the Financial Institutions Department’s current goal is to preserve the company’s remaining corporate value for the benefit of Prime Trust’s clients.
Major cryptocurrency custody firm BitGo canceled a non-binding term sheet it had signed to acquire a 100% stake in Prime Trust’s parent company, Prime Core Technologies, on March 22.
What is custody
Refers to holding and managing assets on behalf of investors. A term widely used for assets other than virtual currency. It refers to a service that performs a wide range of operations, such as asset custody, settlement related to trading, receipt of principal and interest, dividends, and exercise of voting rights. A company that performs custody is called a custodian.
Cryptocurrency Glossary
Affects multiple companies
Several companies have been affected by Prime Trust’s suspension of withdrawals.
Crypto payment infrastructure company Stably has announced that it is “exploring partnerships with new custody companies” as it has been forced to suspend some services and operations.
Estonia-based cryptocurrency trading platform Coinmetro also reported that Stably’s suspension of US dollar deposits and withdrawals has caused problems with US dollar transactions. The company said it is looking for other payment partners.
Important announcement: unexpected disruption in USD transactions. We regret to inform you that our partner for USD payments PrimeTrust has temporarily suspended USD deposits and withdrawals. This means that Coinmetro is currently unable to process new USD transactions.
While…
— Coinmetro (@CoinMetro) June 22, 2023
Securitize Markets, an investment platform such as alternative assets, also explained that secondary trading through alternative trading systems has been temporarily suspended.
Customers’ security tokens are not affected as they are stored by the company’s parent company, Securitize.
Securitize Markets said that protecting investor assets is a top priority and that parent company Securitize will respond if Prime Trust is unable to withdraw funds.
It also said it expects to partner with a new custody company in the next month and resume business as usual.
Additionally, TrueUSD, the issuer of the stablecoin TUSD, has issued a statement that it has no exposure to Prime Trust. The TUSD price was temporarily depegged from $1 due to concerns about asset preservation, but has now returned to $1.
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