Prime Trust Faces Potential Receivership Following Legal Action from Nevada Financial Institutions Division

17 views 8:08 am 0 Comments June 29, 2023

In an unexpected legal turn of events, Prime Trust LLC has come under the radar of the Financial Institutions Division in Nevada. The Division has initiated a legal petition, suggesting the need for a receivership over Prime Trust. This significant move was instigated due to what the Division perceives as insecure operations and insolvency issues with the firm, following a cease-and-desist order that was served on June 21, 2023.

The legal petition exposed a staggering debt of over $82 million in fiat money owed by the company. Furthermore, it was revealed that Prime Trust has been unable to access its so-called “legacy” cryptocurrency wallets since 2021.

The petition explains:

“In the onset of 2021, Prime introduced particular legacy wallet forwarding addresses (termed “Legacy Wallets”) to their clientele. This action was initiated due to restrictions linked to generating new wallets within the Fireblocks platform. Prime was under the impression that these legacy wallets were integrated within the Fireblocks system or set to forward to wallets available on the same platform. However, it came to light in December 2021 that Prime was incapable of accessing these Legacy Wallets and the contained cryptocurrency. From December 2021 to March 2022, to compensate for withdrawals from the unreachable Legacy Wallets, Prime obtained additional digital currency using customer funds from its pooled customer accounts. While Prime has been making strides to reaccess the Legacy Wallets, it has been unsuccessful till the date of this petition.”

Moreover, the petition highlighted the firm’s precarious financial situation, stating:

“Alongside this, there has been a marked increase in client withdrawals from Prime, often involving substantial amounts. At around the time of this petition, Prime’s financial condition is such that it owes $85,670,000 in fiat currency to its clients, while possessing just $2,904,000, indicating an $82,766,000 liability. Regarding digital currency, Prime owes $69,509,000 but holds only $68,648,000. Hence, Prime would fail to meet all its withdrawal obligations.”

Per the official announcement, the Division’s petition aims to appoint a receiver to take control of Prime Trust’s daily operations and carry out a comprehensive financial assessment. The receiver’s role is crucial in deciding the most effective action plan to protect the company’s clients. This may include restructuring and returning Prime to private management or opting for total liquidation.

The Nevada Financial Institutions Division clarified in a statement that it cannot offer legal counsel or advice to Prime’s customers. Clients with queries regarding how this situation may affect their business are encouraged to reach out directly to Prime Trust via [email protected].