Prime Trust, LLC, a prominent player in digital asset custody, has filed voluntary petitions for Chapter 11 bankruptcy.

According to a report released by the company on Aug. 14, the proceedings are expected to provide a “transparent and value-maximizing process for the benefit of its clients and stakeholders.”

The Nevada-based company is known for its innovative services in digital asset management. As reported on July 18, Nevada courts ordered Prime Trust into temporary receivership, signaling the serious financial difficulties it faced.

The company’s financial deficit in July reportedly exceeded $82 million. As of the Chapter 11 filing, the consolidated list of the top 50 unsecured creditors totals $144 million.

Further, across four filings for Prime Trust group companies, Prime Core Technologies Inc., Prime Digital, LLC, Prime IRA LLC, and Prime Trust, LLC, there are liabilities recorded to be $100 million and $500 million, and assets between $50 million and $100 million.

The potential impact on the industry could be significant, given its pivotal role in providing custodial services to institutional crypto investors.

Prime Trust is a ‘qualified custodian,’ meaning that all customer custodied assets should be protected from the bankruptcy of the custodian. CryptoSlate has reached out to Prime Trust for confirmation but has yet to receive a response as of press time.

The decision to file for Chapter 11 bankruptcy follows the permanent appointment of former banking executive John Guedry as receiver for the company. Guedry, along with John Wilcox and Michael Wyse, form a special restructuring committee with the authority to oversee the company’s ongoing bankruptcy cases.

As the company continues to operate as “debtors-in-possession,” it intends to file several motions with the Bankruptcy Court to facilitate the “orderly evaluation of all strategic alternatives.” These measures could potentially include selling the company’s assets and operations as a going concern.

Prime Trust’s financial crisis, initiated nearly a month before the receivership order, has ripple effects within the crypto industry.

It began with the Nevada Financial Institutions Division (NFID) issuing a cease and desist order on June 21 due to the company’s inability to fulfill customer withdrawal requests.

This was shortly followed by the bankruptcy declaration of Prime Trust subsidiary Banq on June 14 and the termination of BitGo’s planned acquisition of Prime Trust on June 22.

Further details related to the court-supervised proceedings will be made available as the proceedings unfold. They can be accessed on the DDebtors’restructuring website.

The post Up to $500M in liabilities as crypto custodian Prime Trust files Chapter 11 bankruptcy appeared first on CryptoSlate.

Similar to Notcoin - Blum - Airdrops In 2024

origin »

206 +