Nevada regulator says Prime Trust can’t meet withdrawal requests

Nevada’s Financial Institutions Division ordered Prime Trust to stop all operations as its business has declined to a “critically deficient level”

article-image

esfera/Shutterstock, modified by Blockworks

share

Cryptocurrency custodian Prime Trust is experiencing a significant deficit and won’t be able to fulfill all customer withdrawal requests, according to a cabinet-level Nevada state agency.

This notice was made available on the regulatory body’s website shortly after BitGo stated its decision to cancel the prospective acquisition of Prime Trust.

Prime Trust has been incapable of fulfilling withdrawal requests since about June 21 “due to a shortfall of customer funds,” the regulator said in its cease-and-desist order published Thursday. 

The crypto custodian was ordered to cease all activities as it has “considerably deteriorated to a critically deficient level” and is now in an “unsafe or unsound condition to transact business,” the state said.

Prime Trust has “materially and willfully breached its fiduciary duties to its clients,” it added.

Desperate efforts for emergency funding 

Nevada’s Financial Institutions Division found that Prime Trust had a negative stockholders’ equity of $12 million as of March 2023, which means the company owed more money than it had.

Blockworks reported earlier this month that Prime Trust had been scrambling to raise millions of dollars through emergency fundraising. It had been in talks with a bunch of potential financiers, with some executives considering a $25 million investment would stabilize the balance sheet.

Subsequently, BitGo struck a preliminary deal to acquire the company for an undisclosed amount. But the deal was scrapped on Thursday.

Prime Trust given 30-day window to request hearing

Many companies including digital asset firm Hayvn and fiat on-ramp service Stably announced that Prime Trust had halted deposits after being ordered to do so by the Nevada regulator.

“Please take action immediately to stop sending client custody assets to Prime Trust, especially digital assets,” Stably said.

Prime Trust didn’t immediately return Blockworks’ request for comment.

Prime Trust can choose to ask for a hearing within 30 days. If it doesn’t, the order will become final.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Featured.png

Research

Helium stands at a pivotal moment in its evolution as a decentralized wireless network, balancing rapid growth, economic restructuring, and global expansion. With accelerated growth in domestic DAUs and Hotspots supporting its network, Helium is leveraging strategic partnerships and innovative proposals to scale internationally. The recent implementation of HIP 138, “Return to HNT,” has unified its token economy under HNT, simplifying participation and strengthening liquidity, while HIP 139’s phase-out of CBRS refocuses efforts on scalable Wi-Fi offload. Meanwhile, governance shifts under HIP 141 raise questions about centralization as Nova Labs consolidates control over the roadmap.

article-image

In 2011, WikiLeaks faced a financial blockade imposed by the US government. It was Bitcoin’s first major test.

article-image

Kado’s founder Emery Andrew spoke to Blockworks about the acquisition and what’s next for the team

article-image

LayerZero’s Bryan Pellegrino chatted with Blockworks about the firm’s next steps and its 10-year runway

article-image

Colosseum co-founder Matty Taylor is seeing “high-performance [Solana] founders showing a lot of interest in private trading technology”

article-image

Executives weigh the growth potential they see in the public stock and private credit/equities arenas

article-image

Players can stake ME, trade tokens and link wallets to climb the leaderboard