Prime Trust receivership is approved by Nevada judge

Quick Take

  • A Nevada district judge approved a petition from June to place the crypto custodian into receivership, pending a court hearing in August. 

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."


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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.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Sarah is a reporter at The Block covering policy, regulation and legal happenings. Before, Sarah was a reporter with CQ Legal writing about securities regulation, which is where she first started reporting on crypto. Sarah has also written for The Bond Buyer and American Banker, among other finance-related publications. She graduated from the University of Missouri and earned a degree in print and digital journalism. Sarah is based in Washington D.C., and is an avid coffee lover. You can follow her on Twitter @ForTheWynn.


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