Apparently It's Very Difficult to Custody Crypto

CoinDesk
CoinDesk

29 Jun 2023 3:22 PM

Prime Trust, the allegedly insolvent crypto custodian that owes customers upwards of $156 million, is not helping the crypto industry's shady mainstream reputation....

  • BitGo terminated its acquisition of Prime Trust, a crypto custody company, due to Prime Trust's deteriorating financial condition.
  • Nevada's Financial Institutions Division (FID) ordered Prime Trust to cease all activities and filed to place the company into receivership.
  • Prime Trust allegedly owes its clients $85 million in fiat currency and $69.5 million in crypto.
  • Prime Trust migrated customer assets to Fireblocks in 2020 but encountered issues and had funds sent back to its old wallets in 2021.
  • Prime Trust purchased additional digital currency using customer money to satisfy withdrawals from inaccessible legacy wallets.
  • This incident raises questions about the competence of custodians and the need for third-party custody services.

The article highlights the difficulties faced by crypto custody companies, particularly Prime Trust, which allegedly owes millions of dollars to its clients. The sentiment is negative, as it questions the competence of custodians and raises concerns about the reliability of third-party custody services.

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You May Ask

Why did BitGo terminate its acquisition of Prime Trust?What actions did Nevada's Financial Institutions Division take against Prime Trust?How much does Prime Trust owe its clients in fiat currency and crypto?What were the issues faced by Prime Trust with its migration to Fireblocks?How did Prime Trust try to resolve the issue with inaccessible legacy wallets, and why was it a mistake?

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