Nevada Court Approves Regulator’s Petition to Place Prime Trust in Receivership, Awaits Hearing

Nevada’s Eighth Judicial District Court has granted the petition filed by the state’s Financial Institutions Division (NFID) to place Prime Trust, a cryptocurrency custodian, into receivership. This decision, pending a hearing to show cause, comes as a result of a filing made on July 14, following the NFID’s petition on June 26. Prime Trust will have an opportunity to present its case and challenge the petition during a hearing scheduled for August 22.

The NFID stated that the court-appointed receiver will assume control of Prime Trust’s day-to-day operations, aiming to determine the most suitable course of action to safeguard the interests of the company’s clients.

The court order explicitly instructs Prime Trust’s employees and executives to refrain from any actions that could impede the court’s decision. Court documents reveal that Prime Trust consented to the receivership petition from the Financial Institutions Division, citing a substantial deficit between the company’s assets and liabilities.

The urgent need for a receiver was emphasized by the Nevada financial regulator due to concerns over the potential “irreparable harm” posed to users, the general public, and the overall confidence in the cryptocurrency market. The Financial Institutions Division had previously issued a cease-and-desist order on June 21, stating that Prime Trust was unable to fulfill customer withdrawal requests.

According to the June 26 petition, Prime Trust owed more than $85 million in fiat currency and $69.5 million in cryptocurrency to its clients. However, the firm reportedly held only approximately $2.9 million in fiat and $68.6 million in crypto assets.

Before encountering financial difficulties, Prime Trust was in discussions with BitGo, a wallet infrastructure provider and digital asset custodian, regarding a potential acquisition. However, BitGo officially terminated the deal on June 22, shortly after the NFID issued its cease-and-desist order.

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