Regulator enforcement action on Prime Trust
Following the enforcement action of Nevada’s regulator against Prime Trust, BitGo has terminated its proposed acquisition of Prime Core Technologies. The regulator stated that Prime Trust failed to safeguard assets under its custody and violated Nevada trust laws, which led to the firm breaching its fiduciary duties to its clients. The enforcement action was initiated on November 7th after starting a “safety and soundness examination” on the firm.
Prime Trust unable to honor customer withdrawals
On June 21, the regulator served a cease-and-desist order to Prime Trust to stop accepting fiat and cryptocurrency from existing and new clients for custody purposes. Prime Trust experienced a shortfall of customer funds due to a significant liability on its balance sheet, which resulted in the firm being unable to meet all customer withdrawals and honor them accordingly.
Impact on Stably and TrueUSD
As a consequence, fiat onramp service Stably paused some services and operations after Prime Trust froze withdrawals and deposits. Stably’s parent company, Securitize Inc., has offered support to customers unable to withdraw their funds. TrueUSD, however, stated that its TUSD stablecoin was not affected by the incident.