The U.S. dollar stablecoin TrueUSD (TUSD) announced in early June that it would suspend minting through Prime Trust. In addition, digital asset custody company BitGo’s statement after halting its acquisition of Prime Trust, and the order from the Nevada regulator pointed out that Prime Trust’s financial situation has to the point of serious deterioration.
Nevada Department of Commerce and Industry: Prime Trust Insolvent
The order document from the Nevada Department of Commerce and Industry pointed out that the custodian Prime Trust already had a "shortage of user funds" and was unable to meet the withdrawal requirements for the month. It ordered a cessation of all activities that violated Nevada regulations and emphasized that Prime Trust's funding problem has worsened. to the level of severe deficiencies.
The document mentions:
Prime Trust is operating at a huge deficit and may even be insolvent. Around June 21, 2023, the huge liabilities on the defendant's balance sheet had resulted in a shortage of user funds, the inability to cash user withdrawals, and a violation of Nevada's trust law without the ability to operate normally.
Prime Trust has suspended deposits and withdrawals
Prime Trust did not make any statement on Twitter, but its fiat currency payment service provider Stably has issued an announcement, relaying the notice received from Prime Trust to suspend deposits and withdrawals:
Prime Trust has stopped all deposit and withdrawal services for fiat currencies and digital assets in accordance with the order received from the Nevada Department of Financial Institutions. Please stop sending users' custody assets, especially digital assets, to Prime Trust. We are actively contacting the Nevada authorities. to determine next steps.
Prime Trust may request a hearing within 30 days of receipt of the order, and in the absence of such request, the termination order will be deemed final.
BitGo CEO: Prime Trust unable to complete transaction
BitGo, which also has a custody business, recently tried to acquire Prime Trust but failed in the end. In an exclusive interview with Fortune magazine, BitGo CEO Mike Belshe also revealed the poor financial situation of Prime Trust:
After signing a letter of intent with Prime Trust two weeks ago and conducting due diligence, it became apparent that Prime Trust did not have the financial position necessary to complete the transaction. State regulators ask them to freeze assets because when problems arise they have to step in and fix them.
In fact, although Prime Trust raised US$107 million in June last year, its situation has taken a turn for the worse since then. In August last year, it was accused of asset theft by bankrupt lending platform Celsius. In January this year, it laid off about 30% of its employees. Banq, a subsidiary of Prime Trust, changed its position in early June. Filed for bankruptcy protection.
Mike Belshe also emphasized that BitGo’s decision has nothing to do with TUSD, and TUSD also tweeted that it has no exposure to Prime Trust and maintains the minting and redemption standards of multiple U.S. dollar stablecoins.
This article Prime Trust’s request for acquisition was rejected, and regulators ordered it to cease operations: its financial situation has seriously deteriorated. It first appeared on Chain News ABMedia.
