The Nevada Department of Business and Industry’s Financial Institutions Division (FID) has taken action against Prime Trust, LLC. This US-based financial institution specializes in custody and settlement services for digital assets.
The FID has alleged that Prime Trust has violated Nevada regulations and has a shortfall in customer funds, which has deteriorated to a critically deficient level.
As a result, the FID has filed a petition to place Prime Trust into receivership. This means that a court-appointed receiver will take control of the company’s assets and operations to protect the interests of creditors and other stakeholders.
Prime Trust Accused Of Using Customer Assets To Buy Back Crypto
The allegations against Prime Trust are significant, with the FID claiming that the firm lost access to legacy wallets in 2021 and used customer assets to buy back crypto.
Prime Trust reportedly owes its customers $85,670,000 in fiat currency but only has $2,904,000, while it owes $69,509,000 in digital currency but only has $68,648,000.
The receivership of Prime Trust could potentially have significant implications for the firm’s customers. If the court grants the petition filed by the Nevada FID, a receiver will be appointed to take control of the firm’s assets and operations.
During the receivership, the receiver will manage and administer Prime Trust’s assets and liabilities. This could include selling off assets to pay off creditors, negotiating with customers to resolve outstanding issues, and taking other actions to wind down the firm’s operations.
For customers of Prime Trust, the receivership could lead to delays and disruptions in accessing their accounts and assets held by the firm. The receiver may need to freeze or restrict customer accounts while they assess the firm’s financial position and develop a plan for winding down its operations.
Customers who have assets held by Prime Trust may also face the risk of loss if the firm’s assets are insufficient to cover its liabilities. While the receiver will work to maximize the recovery of funds for creditors, the outcome of the receivership is uncertain, and customers may not receive the full value of their assets.
The petition to place Prime Trust into receivership will be subject to a hearing, where the court will determine whether the firm should be placed into receivership and whether a receiver should be appointed.
The Majority Of Prime Trust’s Digital Currency Holdings Tied To AUDIO
The news of Prime Trust’s receivership filing has sent shockwaves through the digital asset community, particularly for investors in AUDIO. According to Connor, Director at Coinbase, 88% of the digital currency held by Prime Trust is AUDIO, the native token of the Audius music streaming platform.
This news could trouble AUDIO investors, as the receivership process could result in significant losses for those holding the token.
While the receiver will work to maximize the recovery of funds for creditors and stakeholders, the outcome is uncertain, and investors may not receive the full value of their AUDIO holdings.
The situation is especially concerning, given the recent volatility in the digital asset markets. AUDIO has experienced significant price swings over the past months, and investors may be hesitant to hold a token that is so heavily concentrated in the hands of a single custodian.
At the time of writing, the value of AUDIO stands at $0.1853. This represents a 1.7% decrease in value over the last 24 hours. The token’s price has remained relatively stable following the news of Prime Trust’s receivership filing.
Featured image from Unsplash, chart from TradingView.com