Troubled Crypto Custodian Prime Trust Might Cut 75% of Jobs: Report

Prime
Trust, the beleaguered cryptocurrency custodian, might be on the brink of
significant job cuts, CoinDesk
revealed today (Friday), quoting ex-employees. Anonymous sources suggest that
up to 75% of positions might be at risk, based on insider information.

The news of
the possible massive downsizing comes as the crypto custodian was recently placed in receivership on the order
of the Eighth District Court of Nevada. The action trailed the filing by the Nevada Financial Institutions Division (NFID) to freeze
the custodian’s assets and take over the business.

Earlier,
the state regulator issued a cease-and-desist
order against
Prime Trust, alleging that the company had a “shortfall in customer funds” and
was using its customers’ funds to meet withdrawal requests. Furthermore, NFID,
which is a division of the Nevada Department of Business and Industry, claimed
that Prime Trust was in an “unsafe or unsound” condition to carry out business as its
overall financial condition had worsened to a “critically deficient
level.”

Specifically,
the state regulator claimed that the custodian owned clients about $85 million
in fiat currency and $69.5 million in crypto. On the contrary, the firm reportedly only had about $3 million in
fiat currency at hand compared to the $68.6 million it owned in digital assets. Additionally, NFID said the firm’s
stockholders’ equity position stood at a negative $12 million as of March 2023,
indicating that the company was “operating a substantial deficit.”

In its
filing, Nevada’s financial supervisory authority noted that the shortfall in
funds was related to the custodian’s inability to access certain “legacy
wallets”. However, Fireblocks, with whom Prime Trust completed a crypto asset
management agreement in 2020, told CoinDesk that the
digital asset custodian solely controlled the legacy
wallets, and no funds under Fireblocks’ care were unaccounted for.

In June,
rival crypto custodian,
BitGo, jettisoned its plan to acquire Prime
Trust. The decision came amidst
speculation about Prime Trust’s financial health, Finance Magnates reported.

In January, Prime Trust halted its operations in Texas after previously withdrawing its
application for a Texas Money Transmitter License (MTL). In the same month, the
company significantly reduced its headcount, freeing
up one-third of job positions.

Similarly,
Banq, a Prime Trust subsidiary that provided mobile software
solutions, filed for bankruptcy in Nevada, declaring $17.72 million in assets
and $5.4 million in liabilities.

Prime
Trust, the beleaguered cryptocurrency custodian, might be on the brink of
significant job cuts, CoinDesk
revealed today (Friday), quoting ex-employees. Anonymous sources suggest that
up to 75% of positions might be at risk, based on insider information.

The news of
the possible massive downsizing comes as the crypto custodian was recently placed in receivership on the order
of the Eighth District Court of Nevada. The action trailed the filing by the Nevada Financial Institutions Division (NFID) to freeze
the custodian’s assets and take over the business.

Earlier,
the state regulator issued a cease-and-desist
order against
Prime Trust, alleging that the company had a “shortfall in customer funds” and
was using its customers’ funds to meet withdrawal requests. Furthermore, NFID,
which is a division of the Nevada Department of Business and Industry, claimed
that Prime Trust was in an “unsafe or unsound” condition to carry out business as its
overall financial condition had worsened to a “critically deficient
level.”

Specifically,
the state regulator claimed that the custodian owned clients about $85 million
in fiat currency and $69.5 million in crypto. On the contrary, the firm reportedly only had about $3 million in
fiat currency at hand compared to the $68.6 million it owned in digital assets. Additionally, NFID said the firm’s
stockholders’ equity position stood at a negative $12 million as of March 2023,
indicating that the company was “operating a substantial deficit.”

In its
filing, Nevada’s financial supervisory authority noted that the shortfall in
funds was related to the custodian’s inability to access certain “legacy
wallets”. However, Fireblocks, with whom Prime Trust completed a crypto asset
management agreement in 2020, told CoinDesk that the
digital asset custodian solely controlled the legacy
wallets, and no funds under Fireblocks’ care were unaccounted for.

In June,
rival crypto custodian,
BitGo, jettisoned its plan to acquire Prime
Trust. The decision came amidst
speculation about Prime Trust’s financial health, Finance Magnates reported.

In January, Prime Trust halted its operations in Texas after previously withdrawing its
application for a Texas Money Transmitter License (MTL). In the same month, the
company significantly reduced its headcount, freeing
up one-third of job positions.

Similarly,
Banq, a Prime Trust subsidiary that provided mobile software
solutions, filed for bankruptcy in Nevada, declaring $17.72 million in assets
and $5.4 million in liabilities.