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:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

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.

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.

recent research

Research Report Templates.jpg

Research

Bluefin possibly stands at an inflection point. The token is near an all-time low yet the protocol’s spot volume market share and derivatives exchange usage have been increasing month over month since its November launch. Given its current market position and the upcoming upgrades (for both Bluefin and SUI), there may be upside potential before the increased supply growth in December. However, strong opposition from existing competitors (like Cetus and Suilend), as well as new entrants (like Aftermath), pose key challenges to Bluefin’s medium-term success.

article-image

Top Committee Democrat Sen. Elizabeth Warren in her opening statement accused Atkins of “helping billionaire CEOs like Sam Bankman-Fried”

article-image

Introducing garbled circuits for enhanced privacy and regulatory compliance

article-image

Ross Ulbricht was a freedom maximalist building freedom tech, powered by Bitcoin

article-image

Solana validators can reap benefits including payments, votes and community clout

article-image

Sponsored

WalletConnect is cementing itself as the essential connectivity layer, ensuring wallets remain the entry point for billions of users

article-image

According to a legal filing, Galaxy Digital helped boost the price of LUNA while quietly selling its tokens