• Home
  • Cryptocurrency
  • Prime Trust, a cryptocurrency custodian, has initiated a Chapter 11 bankruptcy filing.

Prime Trust, a cryptocurrency custodian, has initiated a Chapter 11 bankruptcy filing.

Aug 15, 2023 at 11:58 am

Crypto custodian Prime Trust has submitted a Chapter 11 bankruptcy protection request in the state of Delaware due to a shortfall in customer funds.

According to a filing made on August 15th, the company has revealed that it owes liabilities ranging between $100 million and $500 million to an estimated 25,000 to 50,000 creditors. In contrast, its estimated assets are valued between $50 million and $100 million.

The company stated in a press release that it plans to present various motions to the Bankruptcy Court in order to streamline the evaluation of strategic options. These motions may involve continuing employee compensation and benefits, along with exploring potential asset and operation sales.

The largest unsecured creditors of Prime Trust, amounting to approximately $105 million in claims, are mainly comprised of the top five. This includes the most substantial claim of $55 million. Entities like Prime Core Technologies Inc., Prime Trust, LLC, Prime IRA LLC, and Prime Digital LLC are among those seeking Chapter 11 relief.

Prime Trust's decision to file for bankruptcy follows regulatory action taken by Nevada's business regulator on June 21st. A cease and desist order was issued due to the firm's "critically deficient" financial condition, which had impeded its ability to fulfill customer withdrawal requests.

Shortly thereafter, on June 26th, Nevada's regulator sought court intervention to place Prime Trust under receivership. The court granted this request on July 18th.

Prime Trust accepted the regulatory petition due to a significant disparity between its assets and liabilities. At the time of the petition, the company owed over $85 million in fiat currency to its clients but only possessed approximately $2.9 million. The digital asset liabilities were comparatively smaller, with Prime Trust owing around $69.5 million in cryptocurrencies while holding approximately $68.6 million.

Related News

Sign up for daily crypto news in your inbox

Get crypto analysis, news and updates right to your inbox! Sign up here so you don't miss a single newsletter.