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The crypto custodian’s bankruptcy comes as it’s been unable to honor customer withdrawals for months.
Crypto custodian Prime Trust has filed for Chapter 11 Bankruptcy in Delaware after it faced a shortfall in customer funds.
The company said in an Aug.15 filing that it has between 25,000 to 50,000 creditors and estimated liabilities between $100 million to $500 million compared to $50 million to $100 million worth of estimated assets.
“The Company believes that the commencement of the Chapter 11 Cases will provide a transparent and value-maximizing process for the benefit of the Company’s clients and stakeholders,” it said in an accompanying press release.
The firm’s top five unsecured creditors have claims of roughly $105 million — $55 million of which is the largest unsecured claim reported by Prime Trust.
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Prime Core Technologies Inc., Prime Trust, LLC, Prime IRA LLC and Prime Digital, LLC were the entities listed as the entities filing for Chapter 11 relief.
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Prime Trust’s bankruptcy follows Nevada’s business regulator issuing the firm a cease and desist order on June 21 saying its financial condition was “critically deficient” and was unable to honor customer withdrawals.
Days later on June 26, Nevada’s regulator petitioned a court to place the firm into receivership which the court approved on July 18.
Prime Trust agreed to the petition due to what it said was a “substantial deficit between its assets and liabilities.”
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