Banq, the payments subsidiary of cryptocurrency custodian Prime Trust, filed for bankruptcy protection in the United States on June 13, according to court documents.
The move was announced just days after wallet infrastructure provider and digital asset custodian BitGo signed a non-binding letter of intent to acquire Prime Trust on June 8.
Banq's bankruptcy filing lists $17.72 million in assets and $5.4 million in liabilities, and cites the “unauthorized transfer” of $17.5 million in assets to Fortress NFT Group, as well as the illegal transfer of trade secrets and proprietary information to Fortress. The Fortress NFT Group was reportedly founded by Banq's former CEO, CTO, and Chief Product Officer, and Banq is currently in arbitration with Fortress over the allegations.
The timing of the filing, just after the announcement of the BitGo acquisition of Banq's parent company, Prime Trust, raised questions about how it might affect the agreement.
While terms of the deal were not disclosed, if the deal goes through, BitGo will acquire Prime Trust's Payments Rail and cryptocurrency IRA funds, adding to its wealth management offerings.
Prime Trust's Nevada trust company will also join BitGo's network of regulated trust companies in South Dakota, New York, Germany and Switzerland. Prime Trust's API infrastructure and transaction network will be "1:1 mapped" with BitGo services. BitGo said: " This acquisition makes BitGo the first global digital asset company to offer a full suite of solutions for institutions and fintech platforms." The cryptocurrency custody market is growing rapidly, with recent deals including Ripple's $250 million acquisition of Swiss digital asset custo dy provider Metaco in May.
The BitGo/Prime Trust deal, if it goes ahead, comes as the SEC proposes rule changes that would make it harder for cryptocurrency firms to act as custodians of their clients' funds. Prime Trust has been under pressure for some time, with the company Reportedly laying off a third of its staff in January. Later, after the banking crisis in March, it stepped in to hold Binance. US client funds through a network of partner banks.
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