Bankrupt Prime Trust Blocked From Accessing $45 Million Worth Of Digital Assets
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A legacy cryptocurrency wallet associated with Prime Trust has been blocked, and the team cannot access assets worth roughly $45 million, Arkham Intelligence data on June 28 shows. As per the report, most of the assets consist of Ethereum, valued at over $44 million at current rates. The remaining assets are comprised of USDC stablecoin and USD, with a small amount of HEX.
The move comes less than 48 after a court filing requesting that the Prime Trust team or its associates be banned from accessing legacy wallets. The custodian of cryptocurrencies and fiat currencies is in receivership and regulators in Nevada are taking measures to prevent the illegal transfer of users’ funds in violation of a court order.
Prime Trust Troubles
On June 27, Nevada’s Financial Institutions Division (FID) took over Prime Trust and halted operations. It was also reported that the regulator is actively seeking a receiver. Further records show that Prime Trust is facing liquidity challenges.
Receivership filling by the FID reveals that while the custodian owes users over $85 million in fiat, they only have $3 million. At the same time, the company owes users $69.5 million in crypto and held, by the time it filed for receivership, $68.6 million in crypto assets.
At one point, Prime Trust provided services for top-tier cryptocurrency exchanges and service providers, including Binance.US and FTX.
However, after Nevada’s cease-and-desist order warning the crypto community, including clients, that Prime Trust was technically insolvent, events have been going southwards. BitGo pulled back from its initial offer of acquiring the firm. Moreover, there are allegations that Prime Trust used customer funds to process crypto withdrawals. Furthermore, Prime Trust is reportedly operating with a $12 million equity deficit.
Legacy Wallets
The huge deficits following the filing can be attributed to Prime Trust’s inability to access legacy wallets. Based on the latest data from Arkham, one of the legacy wallets in question remain blocked, and the team can’t access it.
Further details reveal that the latest transaction from this wallet was a $527,000 TUSD transfer to Prime Trust Custody wallet in early January 2020. Another inflow was around that time and coincided with Prime Trust being led by a new team. However, there was another inflow in 2021 only for Fireblocks; the team contracted to manage Prime Trust, to discover that they couldn’t access these legacy wallets.
In November 2022, FTX filed for bankruptcy. Subsequently, findings revealed that Sam Bankman-Fried and Alameda Research, a company associated with the exchange, had embezzled billions of user funds.
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