- BitGo, a Crypto Custodian, announced the termination of its acquisition with Prime Trust.
- As a reaction, Prime Trust halts the deposits and withdrawals from Crypto and Fiat.
“We have decided to terminate the acquisition of Fintech Infrastructure provider Prime Trust,” announced BitGo, on June 22.
BitGo is an Institutional Digital Asset Financial Services Company providing clients with liquidity, security, and custody-related services. The company was established in 2013 to offer scalable and secure solutions for the digital asset economy.
On June 8, 2023, the company shared its non-binding contract of intention to acquire Prime Trust, but the deal fell within two weeks.
The breaching of Bitcoin to the $30,000 mark on June 20, 2023, shifted the crypto market upward.
Based on the situation, the Nevada Financial Institution Division (NV FID) ordered Prime Trust to close all the deposits and withdrawals for both Fiat and Crypto for custody.
Prime Trust to halt all withdrawals
BitGo proposed to expand its services and security measures by acquiring Prime Trust, but the situation changed its perspective.
Currently, Prime Trust is not allowed to handle any deposits or withdrawal-related actions. NV FID reported that Prime Trust is facing issues related to fund shortfall owing to significant liability on its balance sheets.
Banq, the payments subsidiary of Prime Trust, filed for bankruptcy protection in the United States. Unauthorized assets of around $17.5 million and $5.4 million liabilities were transferred to Fortress NFT Group on June 13, According to Banq. The information is revealed just days after the contract has been signed between both the Crypto Custodians.
Challenges faced by Prime Trust
Prime Trust Company faced various challenges in the past few months. Firing one-third of its staff in January 2023 and drawing curtains over its actions in Texas resulted in the clients’ exit from the platform.
According to the Coindesk report, in March 2023, the firm reported around negative $12 million in stockholder’s equity position.
The company was also the center of a scandal in Oregon in the US state. Prime Trust contributed around $500,000 to the Democratic Party of the American state of Oregon.
The situation put a negative impression on the Prime Trust Company and resulted in various challenges leading to significant issues for Stably, a crypto trading and settlement platform.
The company was ordered to suspend all its Stably Prime and Stably Ramp activities, including withdrawal, onboarding, and deposits.
As a result, Prime Trust is to suspend specific business expansion activities involving entering into new contracts. Also, Stably services, including Stably USD and Stably Prime, were arrested as these businesses relied on Prime Trust.
However, NV FID offers no specific reason behind the suspension of business operations.
The crypto market has faced various challenges recently due to adverse situations arising between the Crypto Custodian BitGo and Prime Trust. BitGo announced its acquisition with Prime Trust on June 8 and withdrew it on June 22 22. Bitcoin breaching of $30,000 was encountered on June 20, 2023, which increased the crypto market. As a result, Prime Trust was ordered to suspend all its operations, including deposits and withdrawals from Fiat and Crypto.