Crypto Firms Swan, Coinbits Disclose Prime Trust Ties as Fallout Continues - Decrypt

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Decrypt

28 Jun 2023 8:42 PM

Coinbits said Prime Trust “still has enough bitcoin to honor our members’ balances,” and plans to move to a no-custody solution....

  • Crypto companies partnered with Prime Trust are addressing concerns about the safety of customer assets following Prime Trust's failure.
  • Prime Trust was placed into receivership due to financial issues, including the loss of private keys and misappropriation of user assets.
  • Coinbits, a platform for buying, selling, and saving in Bitcoin, intends to fight for its members' funds locked up with Prime Trust.
  • Analysis suggests that the majority of Prime Trust's funds are held in an illiquid token called 'AUDIO', with only $7.5 million held in Bitcoin.
  • Swan Bitcoin, another Bitcoin financial services company, withdrew all assets from Prime Trust prior to its fallout and moved them to Fortress, a crypto custodian led by Prime Trust's former CEO.
  • Swan CEO claims that clawbacks during Prime Trust's bankruptcy process would not be possible due to legal precedent.
  • Bitcoin lightning wallet Strike also escaped Prime Trust with assets intact and decided to take asset custody in-house.
  • Swan CEO believes separating brokerage and custody is necessary due to potential regulatory problems.
  • Limited options exist for legally segregated and bankruptcy remote trust accounts for individual users.

The sentiment in the article is mostly negative, as it discusses the failure and financial issues of Prime Trust, potential risks to customer assets, and concerns about regulatory problems.

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You May Ask

What led to Prime Trust being placed into receivership?How much of Prime Trust's funds are held in Bitcoin?Which crypto companies withdrew assets from Prime Trust before its fallout?Why did Swan Bitcoin decide to take asset custody in-house instead of choosing a new custodian?What are the concerns regarding separating brokerage and custody in the financial industry?

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