- The crypto custodian will keep paying staff benefits and salaries
- Its biggest unsecured creditors' claims amount to $105 million
Struggling crypto custodian Prime Trust has filed for Chapter 11 protection in a Delaware bankruptcy court due to insufficient customer funds, Cointelegraph wrote, citing an August 15 bankruptcy filing. The document shows that Prime Trust’s liabilities are estimated to range from $100 million to half a billion dollars. They have between 25,000 and 50,000 creditors, while the maximum worth of their assets is $100 million.
Company is considering asset and operations sale
According to a press release by Prime Trust, they plan to file a number of motions with the court aimed at enabling a proper evaluation of the strategic alternatives, including a potential sale of Prime Trust’s assets and operations. They add that they expect the motions to include requests to keep paying their staff benefits and salaries.
Top creditors’ claims total $105M
Prime Trust’s biggest unsecured creditors, a total of five, have collective claims of around $105 million. The platform’s single biggest unsecured creditor’s claim alone exceeds $55 million. The entities filing for bankruptcy include Prime Core Technologies Inc., Prime Trust, LLC, and Prime IRA LLC.
Custodian was issued cease and desist order in June
On June 21, a Nevada business regulator issued Prime Trust a cease and desist order – a formal notice to stop a particular activity or behavior that is believed to be in violation of a law, regulation, or the rights of another party. The regulator described its financial status as “critically deficient.” Prime was found unable to process customer withdrawals due to insufficient funds.
A few days later, the same regulator requested Prime go into receivership. A court approved the request in July. At the time of the request, the custodian owed its customers more than $85 million, but its assets amounted to less than $3 million.
Prime subsidiary Banq filed for bankruptcy in June
Prime Trust’s insolvency was preceded by that of its subsidiary. In mid-June, the entity Banq filed for insolvency in a Nevada bankruptcy court. At the same time, Prime Trust partner TrueUSD paused stablecoin mints. Banq had $18 million in assets compared to $5 million in liabilities.
Prime Trust started experiencing liquidity issues after Celsius declared insolvency. Its bandwidth issues caused TrueUSD to stop minting and redemptions.
