Prime Trust cannot fulfill withdrawals?!!

On June 21, financial regulators in Nevada took action against Prime Trust by issuing a cease and desist order. The Nevada Financial Institutions Division (NFID) had been closely monitoring Prime Trust's solvency before the potential acquisition or merger with BitGo.

However, BitGo ultimately decided to abandon the deal on June 22. The NFID's investigation revealed that Prime Trust had failed to adequately safeguard assets under its custody and was unable to fulfill client withdrawal requests.

As a result, the cease-and-desist order prohibits Prime Trust from accepting fiat currency and cryptocurrency from both current and new clients. This regulatory intervention aims to protect the interests of clients and ensure compliance with financial industry standards.

According to the issued cease and desist order, Prime Trust's financial condition has reached a critically deficient level, rendering the firm in an unsafe and unsound state. The order highlights that Prime Trust is facing a substantial deficit and/or insolvency, indicating a severe deterioration in its financial standing.

Furthermore, the order accuses Prime Trust of willfully and materially breaching its obligations towards its clients. As per the order, Prime Trust has a 30-day window to request an administrative hearing in response to the allegations made against the company.

As a consequence of this development, Stably, a stablecoin firm, has announced a temporary suspension of both minting and user withdrawals. This decision comes in response to the incident involving Prime Trust, as Stably relied on Prime Trust as its custodian.