Judge approves Nevada regulator's receivership request for Prime Trust

Nevada’s Eighth Judicial District Court has granted state regulators’ receivership petition against crypto custodian Prime Trust. The company's operations will be taken over by Bank of Nevada President John Guedry. According to a July 14 filing, judges at Nevada's Eighth Judicial District Court said the court found sufficient grounds to grant the petition after reviewing the merits and purview of the petition and relevant evidence, including the defendant's consent. The judge then ordered Prime Trust to appear in court on August 22 to explain why the state regulator's application should not be permanently granted. The original petition seeks to take over the company's day-to-day operations and overhaul all of its finances to determine the best option to protect Prime customers, which is to restore the company and place it into private administration or liquidate it.

According to previous reports, in June this year, the Nevada Financial Institutions Department (FID) filed a petition with the Eighth Judicial District Court of Nevada, requesting the appointment of a receiver to take over the daily operations of Prime Trust, a cryptocurrency custodian, and inspect all its financial assets. The situation, "either rehabilitate the company and place it under private management, or liquidate the company to protect Prime Trust customers." According to an attachment to its document, Prime Trust's management board agreed to take over. The FID claims that Prime operates in an unsafe and unsound manner, has no funds to pay customer deposits, and is unable to continue cryptocurrency custody services. FID documents show that Prime Trust lost access to the old wallet as early as 2021 and used customers' assets to buy back cryptocurrencies. The data shows that Prime Trust owes customers US$85.67 million in legal currency assets, but Prime Trust only holds US$2.904 million. Prime Trust owes customers $69.509 million in digital assets, but holds only $68.648 million.