Nevada regulators have filed a lawsuit to place Prime Trust LLC in receivership, according to an official June 27 press release.
The Nevada Financial Institutions Division (NFID) said it had asked the courts to appoint a receiver to take control of Prime Trust’s day-to-day operations. After reviewing the business, the receiver could return Prime Trust to private management or liquidate the business.
Regulator calls for restrictions
The NFID also called for restrictions that would prevent Prime Trust members from accessing and moving company funds. The receiver would obtain title to the property and assets of Prime Trust and could take all necessary steps related to the procedure.
The text of the filing further notes that Prime Trust has requested receivership and that a show cause hearing is expected to take place within 15 days.
The current action follows an earlier cease and desist order from the NFID on June 23. There, the regulator said Prime Trust could not respond to customer withdrawals. He ordered the company to stop accepting fiat currency and cryptocurrency at the time.
Current financial situation of Prime Trust
Regulators said Prime Trust lost access to some “Legacy” cryptocurrency wallets in December 2021, but the company continued to buy cryptocurrency to meet customer withdrawals. The company is still unable to access these wallets.
The NFID also said Prime Trust had seen an increase in withdrawals. These two factors led to his inability to meet withdrawals.
Prime Trust currently has a trust deficit of $82.8 million. Although she owes $85.7 million to her clients, she only has $2.9 million. It also has a smaller cryptocurrency deficit of $861,000, as it owes $69.5 million worth of crypto to its customers but has $68.6 million.
For reasons that are unclear, Prime Trust appears to hold a large amount of Audius (AUDIO) tokens. Arkham Intelligence reported that the company owns $61 million in AUDIO, which represents 31% of the AUDIO supply and outweighs all of its other assets.
Nevada post calls for Prime Trust to go into receivership, reports $82 million shortfall first appeared on CryptoSlate.