Nevada Court Orders Prime Trust in Receivership

The Eighth Judicial District Court of Nevada has accepted a petition from the Nevada Financial Institutions Division (NFID) to put cryptocurrency custodian, Prime Trust, into receivership, pending a hearing. 

A July 14th court document from Nevada showed that a receiver for Prime Trust was appointed, in response to a petition from the state's financial regulatory body filed on June 26th. Prime Trust is set to present its case as to why the petition should not be permanently approved in a hearing scheduled for August 22nd.

According to the NFID, "the court appointed receiver will take over the day-to-day operations of the company to determine the best option to protect Prime’s client."

The court's order largely prohibits Prime Trust's staff and executives from taking any measures that might interfere with the court's ruling. As per the legal documents, Prime Trust conceded to the Financial Institutions Division's receivership petition due to a significant imbalance between its assets and liabilities.

At that point, the Nevada financial regulator demanded the urgent appointment of a receiver, citing potential "irreparable harm" to customers and public trust. The Financial Institutions Division stated that Prime Trust was "unable to honor customer withdrawals" as required by a cease and desist order issued on June 21st.

The petition from June 26th stated that Prime Trust was in debt to its clients for more than $85 million in fiat currency and $69.5 million in cryptocurrency. Despite this, the company reportedly only possessed approximately $2.9 million in fiat and $68.6 million in cryptocurrency.

Before Prime Trust encountered its financial difficulties, BitGo, a provider of wallet infrastructure and a custodian for digital assets, had contemplated acquiring the firm. However, BitGo officially terminated the deal on June 22nd, roughly a day after the NFID issued its cease and desist order.