Prime Trust Crypto Custodian Enters Chapter 11 Bankruptcy Amid Prolonged Crypto Winter
On Monday, Las Vegas cryptocurrency custodian Prime Trust filed for Chapter 11 bankruptcy protection, marking another setback for the troubled fintech company.
In the August 15th filing, the company stated that it has 25,000 to 50,000 creditors and expects liabilities of $100 million to $500 million.
And with Prime Core Technologies Inc., Prime Trust LLC, Prime IRA LLC, and Prime Digital LLC listed as entities, its estimated assets are valued at $50 million to $100 million.
As mentioned in a linked press release, the company plans to file motions with the Bankruptcy Court to help assess strategic options, including the potential sale of its assets and continuing operations. However, recent issues with Nevada Regulators and Creditors might complicate finding a buyer.
With the Chapter 11 filing aimed at transparency and value for clients, John Guedry, ex-president of Bank of Nevada, will lead the restructuring overseen by Judge Susan Johnson.
Prime Trust will operate as "debtors-in-possession" under the court during this.
Prime Trust declared bankruptcy after receiving a cease-and-desist order from Nevada's business regulator on June 21.
The regulators moved to shut down the cryptocurrency custodian due to severe financial woes.
Significant debts in both fiat and cryptocurrencies burden Prime Trust.
Regulators discovered that Prime Trust owed over $85 million in fiat but had only $2.9 million. The company also owed $69.5 million in cryptocurrencies but only had access to a little over $68.6 million.
The order stated that the firm's financial condition needed to be improved, preventing it from fulfilling customer withdrawal requests.
Nevada regulators placed Prime Trust into receivership in late June due to insolvency,
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