Crypto Custodian Prime Trust Teeters on the Brink of Collapse; The company previously stored assets and provided banklike services to crypto firms Binance.US, FTX and Celsius Vicky Ge Huang and Alexander Osipovich - The Wall Street Journal Another crypto quasi-bank appears to be on the brink. Prime Trust, a state-chartered trust company that serves as a custodian for crypto firms, is feared by digital-asset investors to be on the verge of failing after being rebuked by its state regulator and abandoned by a potential acquirer. Las Vegas-based Prime Trust has a shortfall of customer funds and was unable to honor customer withdrawals this week, according to the Nevada Department of Business and Industry. /jlne.ws/3PvVFov
ALEXANDRA CITRIN-SAFADI/THE WALL STREET JOURNAL By Vicky Ge Huang and Alexander Osipovich June 24, 2023 11:00 am ET Another crypto quasi-bank appears to be on the brink. Prime Trust, a state-chartered trust company that serves as a custodian for crypto firms, is feared by digital-asset investors to be on the verge of failing after being rebuked by its state regulator and abandoned by a potential acquirer. Las Vegas-based Prime Trust has a shortfall of customer funds and was unable to honor customer withdrawals this week, according to the Nevada Department of Business and Industry. The Department’s Financial Institutions Division on Wednesday ordered Prime Trust to cease and desist all activities that violate Nevada regulations, alleging that the company is in an unsafe condition to transact business and might be insolvent. Prime Trust declined to comment on the order. The Securities and Exchange Commission is separately suing two major cryptocurrency platforms, Binance and Coinbase. WSJ’s Caitlin Ostroff breaks down the lawsuits and their potential impact on the crypto industry. Photo illustration: Adam Adada/Xingpei Shen Prime Trust previously ran a number of businesses, but one of its main functions was to hold dollars on behalf of crypto firms, parking the funds in its own bank accounts. Custodians such as Prime Trust are meant to be among the safer parts of the financial system, not engaging in risky activities. It is unclear what caused the reported shortfall of customer funds. Prime Trust confirmed that it stopped all cash and crypto deposits and withdrawals, leaving crypto companies that keep customer assets with the custodian with an uncertain future. The company once played a major role in the infrastructure of crypto markets by holding funds on behalf of companies like FTX, Binance.US and Celsius Network. While Prime Trust has retreated in importance over the past year, its abrupt shutdown sent ripples through the firms that rely on its services. Advertisement - Scroll to Continue Securitize, a blockchain firm that keeps investors’ cash deposits for its trading platform at Prime Trust, said several of its functions have been paused. The firm said in a tweet that it was accelerating its transition to a new custodian and would ensure customers are made whole. Estonia-based crypto exchange Coinmetro, another customer of Prime Trust, said in a tweet that it was unable to process new U.S.-dollar transactions. For weeks, the financial condition of Prime Trust has been the subject of speculation in crypto circles. The company has sought to raise tens of millions of dollars in emergency funding, sparking acute anxiety among crypto companies that store digital assets with the company. Some clients abandoned Prime Trust, such as bitcoin-investing platform Swan Bitcoin. Earlier this month, rival custodian BitGo said it reached a preliminary agreement to buy Prime Trust, appeasing concerns of an immediate collapse. However, days after news of the deal, signs of trouble emerged. Last week, the Texas State Securities Board accused crypto lender Abra of securities fraud, alleging it has been insolvent or nearly insolvent for months. Prime Trust serves as the custodian for Abra’s trading and yield-generating accounts. On Thursday, BitGo walked away from its deal to acquire Prime Trust. BitGo Chief Executive Mike Belshe said BitGo chose not to go ahead with the nonbinding offer after deciding that Prime Trust couldn’t manage its financial difficulties. “They are burning a lot of money,” Belshe said in an interview. For a crypto-focused company, Prime Trust has largely flown under the radar. But its role as an intermediary, helping digital-asset companies park cash at network banks, made it a key partner for digital-asset firms that have struggled to access the banking system directly. After the collapse of Signature Bank earlier this year, crypto exchange Binance.US used Prime Trust to store customers’ cash with the custodian’s network of banking partners, The Wall Street Journal previously reported. The SEC sued Binance.US and Binance earlier this month. Founded in 2016, Prime Trust didn’t start out as a crypto company. It initially focused on acting as an escrow agent that held funds for crowdfunding efforts by early-stage businesses. The company began its pivot to crypto in 2018, agreeing to hold cash for TrustToken, the issuer of the TrueUSD stablecoin, now known as Archblock. After Prime Trust halted deposits and withdrawals, TrueUSD told customers with accounts linked to Prime Trust in an email that they won’t be able to create or redeem the stablecoin while Prime Trust’s operations are suspended. TrueUSD has grown rapidly since Binance started to heavily promote the stablecoin on its platform. Prime Trust’s founder and first CEO was Scott Purcell, a serial entrepreneur whose previous ventures included Kasidie, an online community for swingers. Purcell left in early 2021. In an interview, Purcell told the Journal that Prime Trust had been mismanaged after his departure and had little to show for the more than $170 million it had raised from investors. “How do you burn through that?” said Purcell. “I don’t know. It’s astounding to me.” Prime Trust’s crypto business boomed as bitcoin rallied in 2021. The company gained hundreds of new accounts that year, and its assets under custody nearly quadrupled, it said in a year-end press release in December 2021, though it didn’t detail the size of the firm’s assets. Prime Trust raised $107 million last June in a Series B funding round that included FIS, Fin Capital, Mercato Partners and Kraken Ventures. Among the clients that Prime Trust attracted were crypto lender Celsius Network and FTX, both of which filed for bankruptcy in 2022 as the crypto rally faded. FTX’s U.S. arm held cash at times at Prime Trust, and FTX founder Sam Bankman-Fried used Prime Trust to route donations to a political-action committee he bankrolled, according to Federal Election Commission filings.
Is this the bank that Binance uses to convert tether to USD to provide to its customers who want to withdraw USD from Binance? And is this one that caused Binance to lock down withdrawal requests for like 2 days because it was somehow having some kind of liquidity or processing problems?
Like it or not, we “need” legacy finance to come into this space imo. This shit is absolutely ridiculous. bring on the fucking black rock etf
The SPECTRE group out there that controls the imaginary money needs to hurry up closing these bogus exchanges and get things more organized. The citizens of the world require certain reassurances before they can launder their money with confidence. Long BTC as of last week's 11 week MA crossover.