Crypto custodian Prime Trust files for Chapter 11 bankruptcy

Crypto custodian Prime Trust files for Chapter 11 bankruptcy

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crypto custodian Prime Trust has filed for Chapter 11 Bankruptcy in Delaware after it faced a shortfall in customer funds.

The company said in an Aug.15 filing that it has between 25,000 to 50,000 creditors and estimated liabilities between $100 million to $500 million compared to $50 million to $100 million worth of estimated assets.

“The Company believes that the commencement of the Chapter 11 Cases will provide a transparent and value-maximizing process for the benefit of the Company’s clients and stakeholders,” it said in an accompanying press release.

The firm’s top five unsecured creditors have claims of roughly $105 million — including the largest claim of ov $55 million.

Prime Trust’s largest unsecured creditor has a claim for over $55 million. Source: Stretto

Prime Core Technologies Inc., Prime Trust, LLC, Prime IRA LLC and Prime Digital, LLC were listed as the entities filing for Chapter 11 relief.

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Prime Trust’s bankruptcy follows Nevada’s business regulator issuing the firm a cease and desist order on June 21 saying its financial condition was “critically deficient” and was unable to honor customer withdrawals.

Days later on June 26, Nevada’s regulator petitioned a court to place the firm into receivership which the court approved on July 18.

Prime Trust agreed to the petition based on a “substantial deficit between its assets and liabilities.”

At the time of the petition, Prime Trust owed over $85 million in fiat to its clients but only had around $2.9 million. Its digital asset liabilities were smaller, with Prime Trust owing about $69.5 million in crypto while holding around $68.6 million.

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