Prime Trust, LLC, is at the center of a complicated financial and legal scenario. On August 14, 2023, the company and some of its affiliates transitioned voluntarily petition filed the United States Bankruptcy Court for the District of Delaware for Chapter 11 bankruptcy protection.
The filing is the culmination of a chain of events that began in early June 2023, when rumors of Prime Trust’s bankruptcy began to spread. The Nevada Department of Business and Industry issued a stop-and-sist order on June 21 due to the company’s “critically deficient” financial condition and failure to honor customer withdrawals, exacerbating the problem.
When BitGo, a digital asset custodian, announced on June 22 that it would end its acquisition of the company, Prime Trust’s problems only got worse. Banq, Prime Trust’s payments division, filed for bankruptcy in the US just days before this ruling, reporting $17.72 million in assets and $5.4 million in liabilities.
The petition from the state’s Financial Institutions Division was approved by Nevada’s Eighth Judicial District Court on July 14, placing Prime Trust in receivership. The court-appointed trustee was given the responsibility of overseeing the day-to-day operations of the company and a hearing is scheduled for the 22nd of this month to assess whether or not this decision will be permanent.
Prime Trust’s application of Chapter 11 is part of a larger plan to assess all strategic options, which may include selling the company’s assets and operations as an ongoing concern. The company is confident that this procedure will provide a clear and value-maximizing route for the benefit of its stakeholders and customers.
The current Prime Trust incident serves as a stark reminder of the complex issues faced by companies engaged in the rapidly evolving rypto custody sector. In addition, it highlights the importance of regulatory compliance and potential dangers associated with the evolving bitcoin industry.
The restructuring website for Prime Trust or PACER both provide more information on the court-supervised processes. The issue is still evolving, and how the legal processes unfold is likely to have a major impact on Prime Trust’s customers, stakeholders and the larger digital asset market.
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