Cryptocurrency custody firm Prime Trust is facing heightened regulatory scrutiny, with Nevada business regulators declaring the company's financials to be "seriously deficient." According to the cease and desist order issued by the Nevada Department of Commerce and Industry on June 21, Prime Trust has been unable to honor customer withdrawals since that date due to a shortage of customer funds. The order further charges Prime Trust with failing to safeguard assets and breaching its fiduciary duties to clients. The Prime Trust has been given 30 days to respond to the or der, which will become final if no objections are raised.
In addition to regulatory challenges, Prime Trust's payments subsidiary Banq filed for bankruptcy protection in the US on June 13. This development further examines the difficulties facing Prime Trust. As a result, digital asset custodian BitGo confirmed on June 22 that it has decided to cancel its acquisition of Prime Trust.
A combination of regulatory issues, the inability to honor customer withdrawals, and a payments subsidiary filing for bankruptcy have severely impacted Prime Trust's operations and reputation in the cryptocurrency industry. The company needs to address the allegations made by regulation ators and find solutions to restore trust and stability to its business operations.
