Nevada’s Prime Trust, a crypto custodian, is in receivership.

Nevada’s Financial Institutions Division has taken over Prime Trust, a crypto custodian, and frozen all of its businesses due to insolvency concerns. The move came after BitGo’s bid to acquire Prime Trust fell through and a cease-and-desist order was issued by Nevada alleging that Prime Trust was near bankruptcy. The request for receivership filed on Tuesday stated that Prime Trust owes its clients over $85 million in fiat, has about $3 million in fiat currency on hand, owes a further $69.5 million in crypto, and has $68.6 million in crypto on hand. The filing also revealed that Prime Trust was operating with a $12 million equity deficit. Prime Trust was unable to access “legacy wallets,” and the company entered an agreement with Fireblocks to have the latter company manage its crypto assets. However, in December 2021, Prime Trust “discovered that it was unable to access” its legacy wallets or cryptocurrencies held in those wallets. The company’s condition “will only progressively worsen as customers continue to withdraw,” according to the state’s filing. Both Prime Trust and FID requested the receivership, and the filing asks for preliminary injunctive relief. The court is asked to appoint a receiver to take over the day-to-day operations of the company and examine all its finances to determine the best option to protect Prime’s clients, either by rehabilitating and returning the company to private management or by liquidating the company. The court is also asked to ban Prime Trust, as well as its officers, directors, stakeholders, and others, from disposing of any of Prime Trust’s assets or conducting any transactions. Exhibits attached to the filing show that Prime Trust’s board and interim CEO all signed off on the petition.

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