Key takeaways:
- Following a decrease in customer cash flow, cryptocurrency custodian Prime Trust filed for Chapter 11 bankruptcy protection.
- It noted that it expects the motions to call for requests to keep paying employees’ salaries and benefits.
Following a decrease in customer cash flow, cryptocurrency custodian Prime Trust filed for Chapter 11 bankruptcy protection in Delaware.
According to a filing from the company dated August 15, it is believed to have 25,000–50,000 creditors, $100–500 million in liabilities, and assets worth between $50 and $100 million. According to a press statement that was attached:
“The Company intends to file a number of motions with the Bankruptcy Court designed to facilitate the Company’s orderly evaluation of all strategic alternatives, including potentially a sale of the Company’s assets and operations,”
It noted that it expects the motions to call for requests to keep paying employees’ salaries and benefits. The top five unsecured creditors of the company have claims totaling about $105 million, with the most significant claim coming in at $55 million.
In the list of organizations requesting Chapter 11 relief, Prime Core Technologies Inc., Prime Trust, LLC, Prime IRA LLC, and Prime Digital LLC were named.
According to the bankruptcy filing by Prime Trust, it is the company’s opinion that starting the Chapter 11 process will result in a transparent and value-maximizing procedure for the betterment of the company’s stakeholders and clients. However, it probably signals the end of the road for a business that was thought to be a significant provider of cryptocurrency custodial services a little over a year ago.
Following the issuance of a cease and desist order by Nevada’s business regulator to the company on June 21, which stated that its financial situation was “critically deficient” and that it was unable to honor customer withdrawals, Prime Trust filed for bankruptcy on July 3.
A few days later, on June 26, Nevada’s regulatory body requested a court to declare the company in receivership, and on July 18, the court granted the request. The petition was approved by Prime Trust because to a “substantial deficit between its assets and liabilities.”
Prime Trust had only about $2.9 million when the petition was filed, but it owed its clients approximately $85 million in fiat. Less money was owed in digital assets for Prime Trust, which had a holding value of $68.6 million but a liability of roughly $69.5 million.
