Troubled Crypto Custodian Prime Trust Might Cut 75% of Jobs: Report

Prime Trust, the beleaguered cryptocurrency custodian, might be on the brink of significant job cuts, CoinDesk revealed today (Friday), quoting ex-employees. Anonymous sources suggest that up to 75% of positions might be at risk, based on insider information.

Layoffs on the Horizon?

The news of the possible massive downsizing comes as the crypto custodian was recently placed in receivership on the order of the Eighth District Court of Nevada. The action trailed the filing by the Nevada Financial Institutions Division (NFID) to freeze the custodian’s assets and take over the business.

Earlier, the state regulator issued a cease-and-desist order against Prime Trust, alleging that the company had a “shortfall in customer funds” and was using its customers’ funds to meet withdrawal requests. Furthermore, NFID, which is a division of the Nevada Department of Business and Industry, claimed that Prime Trust was in an “unsafe or unsound” condition to carry out business as its overall financial condition had worsened to a “critically deficient level.”

Specifically, the state regulator claimed that the custodian owed clients about $85 million in fiat currency and $69.5 million in crypto. On the contrary, the firm reportedly only had about $3 million in fiat currency at hand compared to the $68.6 million it owned in digital assets. Additionally, NFID said the firm’s stockholders' equity position stood at a negative $12 million as of March 2023, indicating that the company was “operating a substantial deficit.”

In its filing, Nevada’s financial supervisory authority noted that the shortfall in funds was related to the custodian’s inability to access certain “legacy wallets.” However, Fireblocks, with whom Prime Trust completed a crypto asset management agreement in 2020, told CoinDesk that the digital asset custodian solely controlled the legacy wallets, and no funds under Fireblocks' care were unaccounted for.

In June, the rival crypto custodian, BitGo jettisoned its plan to acquire Prime Trust. The decision came amidst speculation about Prime Trust’s financial health, Finance Magnates reported.

In January, Prime Trust halted its operations in Texas after previously withdrawing its application for a Texas Money Transmitter License (MTL). In the same month, the company significantly reduced its headcount, freeing up one-third of job positions.

Similarly, Banq, a Prime Trust subsidiary that provided mobile software solutions, filed for bankruptcy in Nevada, declaring $17.72 million in assets and $5.4 million in liabilities.