Cryptocustodian Prime Trust has suspended fiat and digital asset deposits and withdrawals following a directive from the Nevada Department of Business and Industry.
The regulator reported a “capital deficit” that left the firm unable to fully meet withdrawal requests.
“General financial condition of the company […] significantly deteriorated to a critically insufficient level. […] Prime Trust has violated its fiduciary duties under Nevada’s trust laws.” – the order says.
The department assumed that the custodian would not be able to function properly if it continued to operate. As of the end of March 2023, the company’s equity was -$12 million.
Prime Trust has 30 days to contest the order.
Initially, the news was announced by his partner, startup Stably.
ANNOUNCEMENT: Our regulated custodian, @PrimeTrustCo, has temporarily suspended all deposits and withdrawals. More information here: https://t.co/j1B65mP6yY
As Prime Trust continues working to restore normal operations as quickly as possible, we are diligently working on…
— Stably (@Stably_Official) June 22, 2023
“During this period, we will suspend business expansion, in particular the signing of new client contracts. Prime Trust actively interacts with NV FID to determine the next steps to resolve any issues and return to normal operation”, says the custodian’s letter.
In response to the actions of the partner, Stably also suspended some operations. The company promised to conclude additional agreements with companies for the storage of cryptocurrencies.
The Coinmetro project got into a situation similar to Stably.
⚠️ Important announcement: unexpected disruption in USD transactions. We regret to inform you that our partner for USD payments PrimeTrust has temporarily suspended USD deposits and withdrawals. This means that Coinmetro is currently unable to process new USD transactions.
While…
— CoinMetro (@CoinMetro) June 22, 2023
The issuer of TrueUSD said that the functioning of the stablecoin is not affected, the company has several partners among banks. The actions of Prime Trust did not affect the ability to issue and redeem the asset. Customers are assured that their funds are safe.
PrimeTrust has suspended all deposits of fiat and digital assets. #TrueUSD (#TUSD) is not affected by this situation. We have no exposure to Prime Trust and maintain multiple USD rails for minting and redemption. Rest assured, all your funds are safe with TUSD.
— TrueUSD (@tusdio) June 22, 2023
According to CoinGecko, TUSD deviated from parity with the US dollar by 0.1%. Over the past 24 hours, the maximum “run-up” has reached 0.5%.
Recall that on June 22, BitGo’s competitor refused to buy Prime Trust. The preliminary agreements were concluded two weeks earlier.
On June 14, Prime Trust’s payments division filed for bankruptcy.
In August 2022, the custodian became involved in a legal battle with the bankrupt crypto lending platform Celsius Network, which demanded the return of approximately ~$17 million in digital tokens.
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