Nevada regulator says Prime Trust’s financials have considerably deteriorated.

Prime Trust, a crypto custodian, has been deemed “critically deficient” in its financial condition and is unable to fulfill customer withdrawal requests, as per a cease and desist order issued by Nevada’s business regulator.

The order, dated June 21, states that Prime Trust’s financial condition has “considerably deteriorated” and the company is now in an “unsafe or unsound condition” to continue its business:

“On or about June 21, 2023, Respondent’s [Prime Trust] was unable to honor customer withdrawals due to a shortfall of customer funds caused by a significant liability on the Respondent’s balance sheet owed to customers.”

The order further alleges that Prime Trust has breached its fiduciary duty to its customers by failing to protect their assets under custody. The regulator also claims that the firm is “unable to meet all customer disbursement requests.”

Prime Trust has 30 days to respond to the cease and desist order and can request an administrative hearing to challenge the order.

Related: TrueUSD assures users it has no exposure to troubled Prime Trust

If Prime Trust fails to contest the order, the cease and desist order will become permanent.

In addition, Banq, the payments subsidiary of Prime Trust, has filed for bankruptcy protection in the United States on June 13. Following this, BitGo, a wallet infrastructure provider and digital asset custodian, announced on June 22 that it has canceled its acquisition of Prime Trust.

Magazine: Cryptocurrency trading addiction — What to look out for and how it is treated

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