HomeNEWSPrime Trust files for Chapter 11 bankruptcy protection

Prime Trust files for Chapter 11 bankruptcy protection


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Prime Trust, a renowned crypto custodian, has filed for Chapter 11 bankruptcy protection. In a voluntary filing to the bankruptcy court in Delaware on August 15, 2023, the financial technology firm could no longer stay in business owing to a shortfall in customers’ funds. According to the filing, the crypto custodian has about 25,000 to 50,000 creditors. 

Furthermore, the fintech company revealed that it has evaluated  liabilities worth between $100 million to $500 million. Meanwhile, the filing revealed that Prime Trust estimated assets worth between $50 million to $100 million. In a press statement attached to the filing, the company indicated that it aims to file a host of motions. 

These motions, as revealed, are targeted toward the “orderly evaluation” of judicious options. Part of these options according to the statement includes the potential sale of Prime Trust’s assets and some of its business operations. However, the sale of the company’s assets could possibly not manifest owing to the host of issues Prime Trust has endured in recent years.

More so, the crypto custodian anticipates that the motions will contain proposals to go on with the payment of employees’ wages and benefits. Accordingly, the firm will remain in operation as a “debtors-in-possession” under the bankruptcy court’s authority. Prime Trust stated that it hopes that the processes of the bankruptcy filing will be transparent and value-maximizing for the interest of its users and stakeholders. 

Background to the bankruptcy crisis of Prime Trust

The bankruptcy filing surfaced after Nevada regulators placed the crypto custodian into “receivership.” This is a result of the company’s assessment by regulators in Nevada. Furthermore, the assessment indicated that the company had become insolvent and could no longer remain in operation. 

Prior to the recent crisis, Prime Trust endured a host of setbacks that cast doubt about the company’s future. Last June, another crypto custodian identified as BitGo made a move to acquire Prime Trust. Surprisingly, the company backed out of the deal without providing a reason. 

Also, during the month, a host of subsidiaries relating to the fintech company were compelled to cease operations. Notably, regulators in Texas filed a cease and desist order against Abra, a subsidiary of Prime Trust. Regulators accused the firm of security fraud. Likewise, another subsidiary, Banq, filed for bankruptcy citing alleged misappropriation. 

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David Idowu
David Idowu
David Idowu is a crypto reporter and trader with wealthy years of experience. He believes that blockchain technology has numerous opportunities that are begging for proper utilization. Away from work, David is either reading about World Politics, History or Tech Innovations.

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