Nevada FID petitions court to place Prime Trust in receivership over financial woes

Nevada’s Division of Financial Institutions has taken legal action against Prime Trust LLC. file a petition in court To place the company in receivership. The division cited concerns regarding the unsafe and unsound operations of Prime Trust as well as its bankruptcy. The move follows the ceasefire order issued on June 21, 2023.

The court petition revealed that the company is owed more than $82 million in fiat cash, and that the company has lost access to a “legacy” wallet holding the cryptocurrency in 2021.

The petition states:

“In January 2021, PRIME reintroduced specific legacy wallet forwarding addresses (“Legacy Wallets”) to customers. It is understood that PRIME did this due to limitations associated with creating new wallets within the Fireblock platform. PRIME PRIME allegedly believed that these legacy wallets existed. The Fireblock Platform or a wallet accessible on the Fireblock Platform was configured to forward. However, it is understood that on or around December 2021, PRIME It was discovered that he was unable to access the legacy wallet and the cryptocurrencies it contained. It is understood that PRIME has frozen customer funds from its omnibus customer accounts to facilitate withdrawals from inaccessible legacy wallets from December 2021 to March 2022. Purchased additional digital currency using PRIME. PRIME is reported to be making efforts to regain access to the Legacy Wallet. However, as of the date of this petition, PRIME has been unable to do so.”

In addition to this previously unknown fault, the petition details the firm’s “vulnerable” financial condition:

“Apart from the above, it has been reported that the frequency of client withdrawals from PRIME has increased recently. Furthermore, many of the withdrawals were for large sums. Thus, at or around the time of the instant petition, it is understood that PRIME’s financial position is such that it owes $85,670,000 in fiat currency to its customers, but has $2,904,000 in fiat currency (equivalent to an $82,766,000 fiat currency liability). As for digital currency, PRIME owes $69,509,000 to its customers, but only has $68,648,000 in digital currency… As such, PRIME will be unable to complete all of its withdrawals.”

According to the statement released, the Division’s petition has sought the appointment of a receiver who will exercise control over the day-to-day operations of Prime Trust and conduct a thorough financial investigation. The receiver will then determine the best course of action to protect the company’s customers, which may include rehabilitating Prime and returning it to private management or liquidating the company altogether.

In a statement, the Nevada Financial Institutions Division emphasized that it is unable to provide legal advice or counsel to customers of Prime. Customers with inquiries regarding the impact of this action on their business are advised to contact Prime Trust directly supportfaq@primetrust.com,