Crypto custody firm Prime Trust has experienced a shortfall in customer funds according to the Nevada Department of Business and Industry, which issued a cease-and-desist order on Thursday. The order alleges that the company’s overall financial condition … has considerably deteriorated to a critically deficient level and that Prime Trust is operating at a substantial deficit or may even be insolvent. The order also states that on or about June 21, 2023, Respondent was unable to honor customer withdrawals due to a shortfall of customer funds caused by a significant liability on the Respondent’s balance sheet owed to customers.
The Nevada regulator claims that Prime Trust may not be able to operate in a sound manner if it were to continue, and that it has breached its fiduciary duties. Prime Trust reported more than negative $12 million in stockholders’ equity position at the end of March 2023, according to the order. Prime Trust can request a hearing within 30 days of the order, and if it does not file for one, the cease-and-desist order will be deemed final.
The order was published on the Nevada regulator’s website hours after fellow crypto company BitGo announced it was terminating its potential acquisition of Prime Trust. Following the deal’s cancellation, a number of companies announced that Prime Trust had halted all fiat deposits in response to Nevada’s order. Prime Trust interim CEO Jor Law did not immediately return a request for comment.