Nevada court orders Prime Trust into temporary receivership
Nevada courts have ordered Prime Trust, a prominent crypto custodian now facing financial troubles, into temporary receivership on July 18, officials confirmed. The Eighth Judicial District Court of Nevada has approved a petition from the Nevada Financial Institutions Division (NFID) that will place Prime Trust into temporary receivership.
John Guedry, formerly an executive at the Bank of Nevada and other financial institutions, has been appointed as receiver pending permanent order from the court. Guedry will oversee Prime’s daily operations; he will also perform a complete examination of the company’s finances and find the best way to protect Prime Trust’s clients.
The NFID said that it is unable to provide legal counsel or advice to Prime’s customers and advised customers of Prime Trust to contact John Guedry directly.
Guedry’s receivership will last, at minimum, until a show cause hearing set for August 22, 2023. That hearing could otherwise affect Prime Trust’s ability to operate.
Prime Trust crisis began nearly one month ago
The NFID initially issued a cease and desist order to Prime Trust on June 21, at which time it said that the company was unable to fulfill customer withdrawal requests. It also ordered the company to stop accepting funds at that time.
The NFID then filed a petition to have Prime Trust placed in receivership on June 26 due to insolvency concerns and the company’s apparent failure to maintain a safe and regulated operational environment, as mandated by NRS 669. That request came with the consent of Prime Trust LLC, signifying the seriousness of the situation.
Prime Trust’s issues have extended elsewhere in the crypto industry. Prime Trust subsidiary Banq declared bankruptcy on Jun 14, while Stably reported that it would halt certain services linked to Prime Trust on June 22. BitGo’s planned acquisition of Prime Trust also failed on June 22 as BitGo itself terminated the deal.
Previous reports indicated that Prime Trust had a deficit above $82 million. The company provided custodial services to institutional crypto investors alongside other services.