The Nevada Division of Financial Institutions has taken legal action against Prime Trust LLC, Submit a petition to the court To place the company in receivership. The department cited concerns about Prime Trust’s unsafe and improper operations as well as its bankruptcy. The move follows a cease and desist order issued on June 21, 2023.
The court petition revealed that the company owes more than $82 million in cash, and that the company lost access to what it describes as “legacy” wallets holding cryptocurrency in 2021.
The petition stated:
In January 2021, PRIME reintroduced select old wallet forwarding addresses to customers (“old wallets”). It is understood that PRIME did so due to the limitations associated with creating new wallets within the Fireblocks platform. PRIME apparently believes these wallets Old wallets are in the Fireblocks platform or are configured to redirect to wallets accessible on the Fireblocks platform.However, it is understood that on or about December 2021, PRIME detected that it was unable to access old wallets and the cryptocurrency in them.It is The understanding is that from December 2021 through March 2022, to satisfy withdrawals from inaccessible Legacy Wallets, PRIME purchased additional digital currency using customer funds from omnibus customer accounts.PRIME was reported to be making efforts to restore access to Legacy Wallets.However As of the date of this petition, PRIME has been unable to do so.”
On top of this previously unknown blunder, the petition detailed the company’s “insecure” financial condition, saying:
In addition to the above, the frequency of customer withdrawals from PRIME has been reported to be increasing recently. Moreover, many raffles were for large sums. As such, at or about the time of the immediate petition, it is understood that PRIME’s financial position owes it, in fiat currency, $85,670,000 to its clients but has $2,904,000 in fiat currency (equivalent to 82 $766,000 commitment in fiat currency). For digital currency, PRIME owes $69,509,000 to its customers but only has $68,648,000 in digital currency… As such, PRIME will not be able to meet all of its withdrawals. “
According to the statement issued, the petition by the department seeks the appointment of a receiver who will take control of the day-to-day operations of the Prime Trust and conduct a comprehensive financial examination. The recipient will then determine the best course of action to protect the company’s clients, which may include rehabilitating Prime and returning it to private management or liquidating the company altogether.
In a statement, the Nevada Division of Financial Institutions confirmed that it is unable to provide legal advice or advice to Prime customers. Customers with inquiries about the impact of this action on their business are advised to contact Prime Trust directly at supportfaq@primetrust.com.
