Nevada’s Department of Business and Industry has issued a cease and desist order to Prime Trust, a crypto custodian, alleging that the company is facing a “shortfall of customer funds” and is unable to fulfill customer withdrawal requests.
According to the regulator, Prime Trust’s financial condition is deemed “critically deficient,” and the firm is now considered to be in an “unsafe or unsound condition” to continue its business operations.
The order, issued on June 21, states that Prime Trust has experienced a significant deterioration in its financial condition, leading to the inability to honor customer withdrawals.
The regulator further accuses Prime Trust of breaching its fiduciary duties by failing to adequately safeguard the assets under its custody.
It also highlights that the company is incapable of meeting all customer disbursement requests.
In response to the order, Prime Trust has 30 days to provide a response and can request an administrative hearing to contest the allegations. If the company fails to contest the order, it will be considered final.
This development comes shortly after Banq, the payments subsidiary of Prime Trust, filed for bankruptcy protection in the United States on June 13.
Additionally, BitGo, a provider of wallet infrastructure and digital asset custody, announced on June 22 that it has decided to cancel its acquisition of Prime Trust.
Cointelegraph reached out to Prime Trust for a comment on the matter, but an immediate response was not received.
The situation raises concerns about the financial stability and trustworthiness of Prime Trust as a custodian of crypto assets.
Customers who have entrusted their funds with the company may face difficulties in accessing their assets and may be uncertain about the safety of their investments.
The outcome of Prime Trust’s response to the cease and desist order will determine the future course of action and the potential repercussions for the company and its customers.
Other Stories:
Federal Reserve Pushing For Robust Oversight of Stablecoins as Form of Money
Millions of Mexicans To Be Able To Pay Internet Bills Via Bitcoin Lightning Network
Car-Maker Announces Launch of its NFT Platform With Near Protocol
