Prime Trust receivership is approved by Nevada judge

A Nevada district court judge approved a petition to place embattled crypto custodian Prime Trust into a state regulator’s receivership, according to a statement on Tuesday from the regulator. 

The Nevada Financial Institutions Division asked for an appointment of receivership last month, alleging that the company didn’t have funds to cover customer deposits and had lost access to some wallets. 

“The Court, having reviewed the points and authorities along with relevant exhibits filed in support of the Petition, including the consent of Respondent, finds good cause to grant the Petition,” the judge said in the Eighth Judicial District Court of Nevada, according to a filing dated July 14.

The judge then ordered Prime to appear before the court on August 22 to show why the state regulator’s petition shouldn’t be permanently granted, according to the filing. 

The original petition sought to take over the day-to-day operations of the company and "thoroughly examine all its finances to determine the best option to protect Prime’s clients, either by rehabilitating and returning the company to private management or by liquidating the company."

Prime has trouble with withdrawals

The regulator said in the petition that Prime had fallen short and owed millions to its customers. 

Prime Trust owes over $85 million in fiat currency to its clients, but has just under $3 million in cash, according to the filing in June. The company also owes over $69 million in digital currency to its clients but currently has about $68 million in digital assets.