By EZ in News — Jun 27, 2023

Prime Trust Placed Into Receivership, Lost $82M of Customer Funds

Nevada's Financial Institutions Division filed to take over crypto custodian Prime Trust and freeze all of its businesses after discovering a major hole on its balance sheet.

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"In 2020, after the migration to Fireblocks was completed, PRIME came under new management. When the new management came to PRIME they were purportedly informed by prior management that all cryptocurrency assets were maintained and accessible in the Fireblocks platform," states the regulatory filing.
"In January 2021, PRIME reintroduced specific legacy wallet forwardingaddresses to customers (“Legacy Wallets”). It is understood PRIME did so because oflimitations associated with creating new wallets within the Fireblocks platform. PRIMEpurportedly believed that these legacy wallets existed on the Fireblocks platform or wereconfigured to forward to wallets accessible on the Fireblocks platform."
"However, it is understood that on or about December 2021, PRIME discovered that it was unable to access the Legacy Wallets and the cryptocurrency therein."

"It is understood that from December 2021 to March 2022, to satisfy the withdrawals from the inaccessible Legacy Wallets, PRIME purchased additional digital currency using customer money from its omnibus customer accounts."

"PRIME is reported to have been making efforts to regain access to the Legacy Wallets. However, as of the date of this Petition, PRIME has been unable to do so."

"It is understood that PRIME’s financial status is such that it owes, in fiat currency, $85,670,000 to its clients but has $2,904,000 in fiat currency (equaling an $82,766,000 fiat currency liability). As to digital currency, PRIME owes $69,509,000 to its clients but only has $68,648,000 in digital currency."

"With consideration of the above, PRIME is in an unsafe financial condition and/or is insolvent. Additionally, PRIME’s condition will only progressively worsen as customers continue to withdraw from PRIME."
"The filing asks for a court to ban Prime Trust, as well as its officers, directors, stakeholders and others, from disposing of any of Prime Trust's assets or conducting any transactions."