The U.S. state of Nevada's financial regulator, the Nevada Financial Institutions Division (NFID), has issued a cease-and-desist order against the crypto custodian Prime Trust after reviewing the company's solvency. The agency said the order prevents Prime Trust from accepting funds from existing and new customers. Following the order, Prime Trust had to halt deposits and withdrawals in both crypto and fiat currencies, affecting several partners like Stably and Coinmetro. - The move came shortly after digital asset trust company BitGo terminated its acquisition deal with Prime Trust.
- The two firms initially reached an agreement after Prime Trust faced financial difficulties due to its exposure to the bankrupt crypto lender Celsius.
- In the order, the NFID stated that the company failed to safeguard customer assets under custody, and it is not in a financial situation that allows it to meet customer withdrawals.
- The regulator also underlined that Prime Trust's financial state is currently at a critically deficient level, saying the firm is now in an unsafe and unsound condition.
- The agency further said the custodian is currently at a substantial deficit or is insolvent.
- Prime Trust has 30 days to request a hearing.
On the other hand, Prime Trust's several partners, including the stablecoin issuer TrueUSD (TUSD) and the crypto-focused financial institution HAYVN said they have no exposure to Prime Trust, and their operations continue to function as normal. - Prime Trust's subsidiary Banq also recently filed for Chapter 11 bankruptcy protection in the U.S. District Court of Nevada.
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