Crypto custodian Prime Trust files for bankruptcy in Delaware

The company had previously faced concerns from Nevada’s state regulator over its ability to honor withdrawal requests

article-image

Mehaniq/Shutterstock, modified by Blockworks

share

Prime Trust, a financial technology company that provides custody and other services for digital assets, filed for Chapter 11 bankruptcy in a Delaware court on Monday.

The company said it filed for protection along with some of its affiliates after facing a shortfall in customer funds earlier this year. It has between 25,000 and 50,000 creditors, according to a court filing.

An attempt to raise millions of dollars in emergency fundraising was made earlier in June, but the company was ultimately unable to secure necessary funding. The shortfall was reportedly caused by Prime Trust’s shrinking customer assets, according to a separate June filing.

Nevada’s Department’s Financial Institutions Division ultimately ordered Prime Trust to cease operations that month, citing concerns over its financial health and its inability to honor withdrawal requests.

Lawsuits from the SEC against Binance affiliates, as well as Coinbase, have ratcheted up retail and institutional trader concerns over storing crypto assets on a centralized exchange.

Even so, the company said it is seeking to emerge from Chapter 11 as a going concern and is open to all strategic options, including a sale of the company, according to a statement

Three of its affiliated companies have been listed as debtors, including Prime Core Technologies, Prime IRA and Prime Digital, according to Stretto.

The company is being overseen by a special restructuring committee, which is expected to file a number of motions with the bankruptcy court in the coming days, including requests to continue to pay wages and provide benefits to employees.

The committee will work with the company’s management team and creditors to develop a plan to restructure the company’s finances and emerge from Chapter 11 as a viable business.

Prime Trust said in its statement it believes Chapter 11 bankruptcy will provide a “transparent and value-maximizing process” for the benefit of its clients and stakeholders.

The bankruptcy is a major setback for Prime Trust, which was once one of the leading financial technology companies in the digital asset space. The company had previously raised over $100 million in funding a year ago from investors such as Kraken Ventures, Mercato Partners and Fin Capital.

It’s the latest in a string of bankruptcy filings born out of last year’s collapse in digital asset valuations — the result of an industry-wide contagion, first initiated by the demise of Terra’s ecosystem in May 2022.


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

Research Report Templates.png

Research

The convergence of DePIN and energy generation aims to address modern grid challenges by incentivizing distributed generation.

article-image

Togo activist Farida Nabourema is fighting back with Bitcoin

article-image

Roshan Robert told Blockworks that OKX brought him on back in September to plan out its US expansion

article-image

Could we stop using BTC to amplify our short-term risks — and start using it to hedge our long-term ones?

article-image

Sol Strategies will be the tokenized stock platform’s first listing

article-image

Craig Fuller, CEO and founder of FreightWaves, breaks down how tariffs are and will impact shipping and inventories

article-image

This limited-edition run of sparkling water is more for existing traders than crypto newcomers, but mainstream distribution is part of the plan.