From Crypto Custodian to Court: Prime Trust Files for Bankruptcy Protection

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In the wake of financial upheavals and regulatory hurdles, Prime Trust, a digital currency custodian, has formally sought Chapter 11 bankruptcy protection. This move closely follows the appointment of John Guedry as the company’s overseer, bolstered by a designated committee to steer the restructuring process.

Crypto Custodian Prime Trust Files for Chapter 11 Bankruptcy Protection

Despite the chaos, Prime Trust pledges to operate with transparency, prioritizing its stakeholders’ best interests. The push for bankruptcy protection marks a new episode in an ongoing drama ignited by claims of financial instability and failures to process customer withdrawals.

As the gravity of Prime Trust’s monetary woes intensified, the Nevada Financial Institutions Division stepped in, signaling its plan to dismantle Prime Trust and seize its holdings. Under a directive from the Eighth Judicial District Court in Nevada, John Guedry, flanked by John Wilcox and Michael Wyse, will helm the restructuring committee.

This panel, dubbed the “special committee,” wields the power to navigate Prime Trust’s Chapter 11 endeavors. Upcoming on Prime Trust’s agenda is the submission of multiple proposals to the Bankruptcy Court. These proposals are designed to refine the assessment of all viable approaches, potentially encompassing the sale of company assets and ongoing operations.

These deliberations emerge from Prime Trust’s recent ordeals, notably its ties with crypto entities like Stably, which encountered disruptions due to their affiliations with the beleaguered custodian. Notably, Stably had to hit pause on most of its offerings, attributing it to Prime Trust’s fiscal setbacks. Moreover, a notable motion from Prime Trust seeks to uphold standard salary and perks for its existing staff members.

Given the mounting concerns over Prime Trust’s fiscal health and looming debts, the emphasis is on safeguarding stakeholder interests. The custodian’s path has been marred by obstacles, ranging from purported inaccessibility of legacy digital currency wallets to facing charges of neglecting fiduciary duties. Documentation from the Chapter 11 submission pinpoints Prime Trust’s debts in the ballpark of $100 million to $500 million.

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