Crypto custodian Prime Trust files for bankruptcy protection

Crypto custodian Prime Trust LLC and some of its affiliates have filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware, the company said today.

In a statement, Prime Trust said the filing follows the appointment of John Guedry as receiver for the company and the appointment of John Guedry, John Wilcox, and Michael Wyse as the sole members of a special restructuring committee.

The Las Vegas-based company said it continues to manage its business as “debtors-in-possession” under the supervision and direction of the special committee.

“The Company intends to file a number of motions with the Bankruptcy Court designed to facilitate the Company’s orderly evaluation of all strategic alternatives, including potentially a sale of the Company’s assets and operations as a going concern,” Prime Trust said, adding that these motions may include requests to continue to pay wages and provide benefits to ongoing employees as usual.

The company’s filing showed that Prime Trust’s estimated liabilities amounted to between $100 million and $500 million, with estimated assets worth of $50 million to $100 million. The number of its creditors came in between 25,001 and 50,000, according to the filing.

The entities filed for bankruptcy protection were Prime Trust LLC, Prime Core Technologies Inc., Prime IRA LLC and Prime Digital, LLC, the filing showed.

Struggling business

Prime Trust began offering services to crypto firms in 2018, but it has recently lost some clients, including crypto exchange Binance.US, which was sued by the Securities and Exchange Commission earlier this year.

The company’s leadership recently tried to sell the firm, but those efforts stalled. In June, crypto custodian BitGo announced that it had reached a preliminary deal to acquire Prime Trust but retracted the decision two weeks later.

Also in June, fiat onramp service Stably said in a notice that Prime Trust had to halt deposits and withdrawals of both fiat and cryptocurrency following an order from the Nevada Financial Institution Division, The Block previously reported.

Updates to add more details.