Prime Trust, a prominent name in the world of crypto custodial services, has taken the unexpected step of filing for Chapter 11 bankruptcy protection in Delaware. This move comes after the company encountered a significant shortfall in customer funds.
In the filing made on August 15, Prime Trust, LLC, Prime Core Technologies Inc., Prime Digital LLC, and Prime IRA LLC were named as the entities seeking Chapter 11 relief.
The company’s decision was prompted by its recognition of a distressing reality: liabilities ranging between $100 million to $500 million, compared to assets estimated at $50 million to $100 million.
This substantial gap underlines the severity of the financial challenges the company is currently facing.
Source: Stretto
A Bid For Transparency And Redemption
Prime Trust’s top five unsecured creditors have laid claims totaling around $105 million, with the largest individual claim amounting to $55 million. The implications of these creditor claims and the company’s financial woes raise concerns about the future of this once-promising crypto custodian.
Prime Trust expressed its belief that the initiation of the Chapter 11 process will offer a transparent and value-driven path forward, benefiting both the firm’s clients and stakeholders.
However, this move represents a stark contrast to the company’s position just over a year ago when it was celebrated as a key player in the realm of cryptocurrency custody.
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As Prime Trust navigates this challenging period, the company intends to operate as “debtors-in-possession” under the jurisdiction of the bankruptcy court.
It is expected that Prime Trust will submit a series of motions to the court, aimed at facilitating a comprehensive assessment of strategic alternatives. These alternatives may encompass a potential sale of the company’s assets and operations as a going concern.
From Recognition To Reckoning
Founded in 2016, Prime Trust initially gained prominence as a blockchain-based infrastructure provider, offering essential application programming interfaces (APIs) to various financial institutions, fintech companies, crypto exchanges, and payment platforms.
The company’s achievements were underscored by its inclusion in Forbes’ list of America’s Best Startup Employers and its recognition within the esteemed “Blockchain 50” compiled by CB Insights, both occurring in 2022.
Crypto Future
While the journey ahead remains uncertain, Prime Trust’s decision to pursue Chapter 11 bankruptcy protection reflects the challenging landscape that even established players in the cryptocurrency industry can face.
The proceedings will undoubtedly be closely watched by industry insiders, clients, and stakeholders, all with a vested interest in the future direction of this once-thriving crypto custodian.
Featured image from The Wall Street Journal
Source: https://bitcoinist.com/crypto-custodian-files-chapter-11-protection/