Nevada Regulator Asks Court to Ban Prime Trust from Any Business Operations

The Nevada Department of Business and Industry has filed a petition with the court to prevent Prime Trust’s crypto custodian from engaging in further business operations and instead appoint a bankruptcy trustee to handle the situation.

This comes after Prime became cash-strapped after the transition of the firm’s leadership, which blocked access to the old wallets containing customer funds.

To meet customer withdrawals, the firm allegedly utilized customer funds to purchase digital assets from December 2021 to March 2022.

The department states that Prime Trust has $85.67 million in fiat liabilities, along with only $2.9 million in assets. Additionally, Prime Trust has a debt of $69.5 million in digital currency, yet have assets totaling only to $68.65 million.

To rectify this, the department has requested the court to immediately impose a ban on Prime Trust’s managers and staff from using or disposing corporate funds.

A bankruptcy trustee would then handle the liquidation or reorganization of the business. Prime Trust was previously requested to freeze the deposit and withdrawal of assets.