A Nevada court has ordered crypto custodian Prime Trust to be put into receivership after the state ordered the company to cease all activities due to a shortfall in customer funds and accusations that it used customer funds to meet withdrawal requests. According to the filing with Nevada’s Department of Business and Industry Financial Institutions Division, Prime Trust’s financial condition has been considerably deteriorated to a critically deficient level which leaves the company in an unsafe or unsound condition to transact business. John Guedry, president of Bank of Nevada, will take over the company’s operations.
The Nevada regulator announced in June that it had filed to take over the company and freeze all of its businesses after it alleged Prime Trust of near insolvency. The request for receivership stated that Prime Trust owed its clients north of $85 million in fiat, and only had about $3 million in fiat currency on hand. The company also owed a further $69.5 million in crypto to customers, and had $68.6 million in crypto on hand, the filing said. It was further accused of using money from its customer accounts to satisfy requests for withdrawals from its legacy wallets.