Prime Trust is on the verge of bankruptcy
American cryptocurrency company Prime Trust is on the verge of bankruptcy
Problems of crypto-asset storage service may affect cryptocurrency exchange Binance and stablecoin issuer TUSD
Cryptocurrency storage service provider Prime Trust faced a "shortage of customer funds" and was unable to meet all withdrawal requests, Coindesk writes, citing documents from the Nevada Department of Business and Industry.
The regulator ordered Prime Trust to cease all activities that violated state regulations. As of June 21, the company was unable to meet customer withdrawal requirements due to insufficient finances, according to documents.
On Thursday, June 22, the company's larger competitor, BitGo, announced the termination of its planned acquisition of Prime Trust. In an interview with Fortune, BitGo CEO Mike Belsch said that after a detailed evaluation of Prime Trust, it became clear that the company's financials did not meet the conditions to complete the deal.
In June 2022, Prime Trust raised $100 million from several investors, including the venture capital arm of the cryptocurrency exchange Kraken. However, the company's financial position was deteriorating due to a bearish period in the crypto market. After the U.S. Securities and Exchange Commission (SEC) revealed close financial ties between Prime Trust and Binance in a lawsuit against the largest cryptocurrency exchange, the first rumors about the company's bankruptcy emerged.
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Prime Trust also acted as a financial partner for TrueUSD (TUSD) Stablecoin. On June 10, TUSD's official social media outlets announced that it was no longer issuing new coins in partnership with Prime Trust, but users report receiving emails from the stablecoin issuer saying that TUSD cannot be converted to dollars and other currencies.
Because of Binance's active promotion and lack of commissions in trading pairs with TUSD, the stablecoin now represents the largest asset in terms of trading volume on exchanges paired with bitcoin, according to CoinMarketCap. According to Binance wallet information compiled by Arkham Intelligence, the exchange owns more than 90% of all TUSD in circulation.
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