Hassan Maishera
TL;DR
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Prime Trust has become the latest cryptocurrency company to file for Chapter 11 bankruptcy.
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The company said it is unable to honor customer withdrawals for months.
Prime Trust Files For Bankruptcy
Cryptocurrency custody firm Prime Trust has filed for Chapter 11 bankruptcy protection in Delaware. The firm filed for bankruptcy earlier today after facing a shortfall in customer funds.
In its filing, the company said it has between 25,000 to 50,000 creditors and estimated liabilities between $100 million to $500 million. The liabilities are more than the $50 million to $100 million worth of estimated assets in the company’s possession.
In its press release, Prime Trust stated that;
"The Company intends to file a number of motions with the Bankruptcy Court designed to facilitate the Company’s orderly evaluation of all strategic alternatives, including potentially a sale of the Company’s assets and operations."
Prime Trust further revealed that it expects the motions will include requests to continue to pay wages and benefits to its workers.
At the time of filing, the company’s p five unsecured creditors have claims of roughly $105 million. The companies listed as the entities filing for Chapter 11 bankruptcy include; Prime Core Technologies Inc., Prime Trust, LLC, Prime IRA LLC and Prime Digital LLC.
This latest development comes a few weeks after the company was issued a cease-and-desist order by Nevada’s business regulator. The regulator pointed out that Prime Trust’s financial condition was “critically deficient”, and the firm can’t honor customer withdrawals.
A few days after the cease-and-desist order, the regulator asked a court to place Prime Trust into receivership, a request the court approved on July 18.
Prime Trust added that;
“The Company intends to file a number of motions with the Bankruptcy Court designed to facilitate the Company’s orderly evaluation of all strategic alternatives, including potentially a sale of the Company’s assets and operations as a going concern. It is anticipated that these motions will include requests to continue to pay wages and provide benefits to ongoing employees as usual.”
At the time of the petition, the company owed around $85 million in fiat to its clients and had only $2.9 million to service them. Prime Trust’s digital asset liabilities were lesser as it currently owes about $69.5 million in crypto and has a holding of $68.6 million.
