Regulators in Nevada filed a court petition to place Prime Trust LLC in receivership, according to an official press release on June 27.
The Nevada Financial Institutions Division (NFID) said that it had asked courts to appoint a receiver to take control of Prime Trust’s daily operations. After examining the company, the receiver could return Prime Trust to private management or liquidate the company.
Regulator seeks restrictions
The NFID also asked for restrictions that would prevent Prime Trust members from accessing and moving company funds. The receiver would gain title to Prime Trust’s property and assets and could take any action necessary related to proceedings.
The text of the filing further notes that Prime Trust has requested the receivership and that a show-cause hearing should take place within 15 days.
The current action follows an earlier cease and desist order from the NFID on June 23. There, the regulator said that Prime Trust could not meet client withdrawals. It ordered the firm to stop accepting fiat currency and cryptocurrency at the time.
Prime Trust’s current financial situation
Regulators said that Prime Trust lost access to certain “Legacy” cryptocurrency wallets in December 2021 but that the company continued to purchase cryptocurrency to meet customer withdrawals. The company is still unable to access those wallets.
The NFID also stated that Prime Trust had seen increased withdrawals. Both of those factors led to its inability to meet withdrawals.
Prime Trust currently has an $82.8 million fiat deficit. Despite owing $85.7 million to customers, it has just $2.9 million on hand. It also has a smaller cryptocurrency deficit of $861,000, as it owes $69.5 million of crypto to clients but has $68.6 million on hand.
For reasons that are unclear, Prime Trust appears to hold a large amount of Audius (AUDIO) tokens. Arkham Intelligence reported that the firm holds $61 million of AUDIO, amounting to 31% of the AUDIO supply and outweighing any of its other assets.
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