Crypto custodian Prime Trust files for Chapter 11 bankruptcy

Crypto custodian Prime Trust has filed for Chapter 11 Bankruptcy in Delaware after it faced a shortfall in customer funds.

The company said in an Aug.15 filing that it has between 25,000 to 50,000 creditors and estimated liabilities between $100 million to $500 million compared to $50 million to $100 million worth of estimated assets.

“The Company believes that the commencement of the Chapter 11 Cases will provide a transparent and value-maximizing process for the benefit of the Company’s clients and stakeholders,” it said in an accompanying press release.

The firm’s top five unsecured creditors have claims of roughly $105 million — $55 million of which is the largest unsecured claim reported by Prime Trust.

Prime Core Technologies Inc., Prime Trust, LLC, Prime IRA LLC and Prime Digital, LLC were the entities listed as the entities filing for Chapter 11 relief.

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Prime Trust’s bankruptcy follows Nevada’s business regulator issuing the firm a cease and desist order on June 21 saying its financial condition was “critically deficient” and was unable to honor customer withdrawals.

Days later on June 26, Nevada’s regulator petitioned a court to place the firm into receivership which the court approved on July 18.

Prime Trust agreed to the petition due to what it said was a “substantial deficit between its assets and liabilities.”

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