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Request to appoint prime trust trustee
On the 26th, the Nevada State Department of Financial Institutions filed a petition with the state’s 8th Judicial District Court to appoint a trustee for crypto asset (virtual currency) custody company Prime Trust.
This measure is taken after judging that Prime Trust is operating in an unsafe and unsound manner and is insolvent.
The Financial Institutions Department has instructed the Court to appoint a trustee who will take over Prime Trust’s day-to-day operations and conduct a thorough investigation of all of the company’s financial circumstances to determine the best options for protecting its customers. I am asking for
He also said that at that time, he would have the option of restructuring and returning the company to private management, or liquidating the business.
The Financial Institutions Department on Monday ordered Prime Trust to stop accepting new assets from clients, citing deteriorating financial conditions. This move is a continuation of that.
connection: Suspension order to US custody company Prime Trust Unable to handle withdrawals
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
According to documents submitted to the court by the Financial Institutions Bureau on the 26th, the Prime Trust Group owes more than 12.2 billion yen ($85 million) in legal currency to customers, and the cash on hand is It is only about 430 million yen (about 3 million dollars).
In terms of cryptocurrencies, he has more than 9.9 billion yen ($69 million) in debt to customers, while he has about 9.8 billion yen (about $68 million) in virtual currency on hand. Yes, it is also over-indebted.
For this reason, the Financial Institutions Department has determined that Prime Trust cannot respond to all withdrawal requests from customers.
Lost access to cryptocurrency wallet
In December 2021, Prime Trust lost access to the digital wallets in which it stored cryptocurrencies, and the cryptocurrencies within them, according to Nevada authorities.
Prime Trust has since used customer funds to buy more cryptocurrencies to make up for lost access, but the company is still unable to access the wallets in question.
As a background, Prime Trust signed a wallet contract with Fireblocks, a virtual currency security platform, in 2019, but it became difficult to create a new wallet on this platform, so a separate digital wallet was created and assets were acquired. was kept.
In addition, Prime Trust has a capital deficit of about ¥1.7 billion ($12 million), according to Nevada government filings. Authorities have asked the court to ban Prime Trust from disposing of its assets or making transactions.
In the filing, Prime Trust’s board of directors and interim CEO also agreed to appoint a trustee.
Case of Abra
A recent example of a cryptocurrency business crisis is Abra, which provided a cryptocurrency and stock investment app in addition to Prime Trust.
The Texas Securities Commission filed a lawsuit against Abra on Thursday, accusing it of securities fraud and concealment of financial information. It also claims that Abra is bankrupt or near bankruptcy as of March 31, 2023.
connection: Virtual currency investment app “Abra” is on the verge of bankruptcy, state authorities sued
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