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Prime Trust faces bankruptcy and is placed in receivership

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The Prime Trust was placed in receivership after a Nevada court approved a petition against it. The crypto custody company owes clients millions of dollars in cash and cryptocurrency.

Prime Trust, the once-bulging digital asset custodian, has been officially placed into receivership by Nevada authorities.

Insolvent or near-insolvent companies are placed in receivership to enable the smooth running of the machine by an authorized entity and realization of its assets to pay debts. John Guedry is appointed as the Prime Trust recipient.

The Nevada Division of Financial Institutions (FID) petitioned for receivership from Prime Trust in June, citing operational instability and risks of insolvency.

The Court has placed the Prime Trust in receivership pending a hearing in August.

Prime Trust issues

Prime Trust’s problems reportedly began in late 2021 when the company lost access to some of its crypto wallets. The company once provided cryptocurrency custody and custody services to companies like Sam Bankman-Fried’s collapsed FTX, Celsius Network, and others.

Last month, FID also issued a cease and desist order against Prime Trust, citing a significant shortfall of customer funds.

BitGo, the leading cryptocurrency custodian, backed out of its acquisition deal with Prime Trust last month. BitGo announced the termination of the purchase on June 22nd. However, the company did not mention the exact reason behind this decision.

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