Up until Thursday morning, cryptocurrency custodian Prime Trust was set to be acquired by rival BitGo. Then the firm pulled out and Nevada regulators ordered the company to end operations.
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Nevada regulators ordered Prime Trust to end operations on Thursday, after the cryptocurrency custodian was unable to satisfy customer withdrawal requests. The decision was announced just hours after rival BitGo announced it was abandoning a takeover of the company.
The state’s Department of Business and Industry said in an order posted on its website that Prime Trust’s financial condition “has considerably deteriorated to a critically deficient level” and that the company was unable to honor withdrawal requests “due to a shortfall of customer funds.” The agency added that Prime Trust “has materially and willfully breached its fiduciary duties to tis customers by failing to safeguard assets under its custody.”
Earlier in the day, BitGo said in a Twitter posting that after considerable effort and work to find a path forward,” the company“has made the hard decision to terminate its acquisition of Prime Trust.”
The takeover, terms of which had not been disclosed, would have given BitGo access to Prime Trust’s banking connections and wealth-management offerings, including a system for U.S. individual retirement accounts to invest in cryptocurrencies Prime Trust raised $107 million of capital in June 2022 at an undisclosed valuation, and has faced numerous challenges in the last eight months. In November, it replaced CEO Tom Pageler and laid off around a third of its staff in January days after ceasing operations in Texas. Its payments subsidiary, Banq, filed for bankruptcy protection last week. The potential BitGo acquisition was announced in early June.
Prime Trust did not respond to Forbes’ request for comment by publication time.