According to a report published by Cointelegraph, Prime Trust, a crypto custodian, has filed for Chapter 11 bankruptcy protection in Delaware due to a lack of customer funds. According to an August 15 filing, the company has 25,000 to 50,000 creditors and estimated liabilities between $100 million to $500 million, compared to $50 million to $100 million in estimated assets.

The company plans to file several motions with the Bankruptcy Court to facilitate an orderly evaluation of all strategic alternatives, which may include a potential sale of the company's assets and operations. Prime Trust also expects to request the continuation of wage and benefit payments to employees.

The top five unsecured creditors have claims of approximately $105 million, with the largest claim amounting to $55 million. Prime Core Technologies Inc., Prime Trust, LLC, Prime IRA LLC, and Prime Digital LLC are listed as the entities filing for Chapter 11 relief.

Prime Trust's bankruptcy filing follows the June 21 cease and desist order issued by Nevada's business regulator, which deemed the firm's financial condition "critically deficient." The regulator petitioned the court to place the firm into receivership on June 26, a request that was approved on July 18.

The company agreed to the petition based on a substantial deficit between its assets and liabilities. At the time of the petition, Prime Trust owed more than $85 million in fiat to its clients but had only $2.9 million available. Meanwhile, the company owed around $69.5 million in digital assets while holding approximately $68.6 million.

Crypto custodian Prime Trust files for Chapter 11 bankruptcy as lack of customer funds puts pressure on the company. Facing a significant deficit between its assets and liabilities, Prime Trust is now seeking an orderly evaluation of strategic alternatives, possibly including a sale of its assets and operations.