Nevada Orders Prime Trust To Cease And Desist For Failing To Safeguard Customer Assets

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Digital asset custodian/wallet BitGo has walked away from its planned acquisition of rival Prime Trust after the latter was ordered to cease and desist its operations in the state of Nevada. 

On Thursday, June 22, BitGo’s official Twitter account tweeted: “After considerable effort and work to find a path forward with Prime Trust, BitGo has made the hard decision to terminate its acquisition of Prime Trust. This decision was not made lightly, and BitGo remains committed to our mission to deliver trust in digital assets.” 

The announcement came just two weeks after BitGo Holdings announced that it had signed a non-binding letter of intent to acquire Prime Core Technologies, the parent company of the Nevada-based Prime Trust. Even as rumours swirled that Prime Trust needed to raise $25 million ASAP, BitGo CEO Mike Belshe claimed that he wouldn’t be doing the deal if Prime Trust’s problems were “insurmountable.” 

On Thursday, Belshe told Fortune that Prime Trust “was not realistic about the state of their business two weeks ago.” While he avoided specifics, Belshe said Prime Trust “just doesn’t have the finances they need to complete the terms we had asked for in the term sheet.”

Shortly after BitGo’s announcement, Prime Trust “regretfully” informed its clients that it was halting deposits and withdrawals of both fiat and digital assets for custody “by order of the Nevada Financial Institution Division [NFID] received on Wednesday, June 21.”

Prime Trust urged clients to “take action immediately to stop sending client custody assets to Prime Trust, especially digital assets,” and warned it “will suspend certain business expansion activities such as signing new customer contracts.” 

Prime Trust claimed to be “actively engaging” with the NFID “to determine next steps to remediate any concerns and return to business as usual as soon as possible.”

Belshe told Fortune that the NFID “asked [Prime Trust] to freeze their assets because they need to go in and sort things out. That happens when something is wrong.” Belshe expressed concern for Prime Trust’s customers, saying, “It’s probably going to be a struggle for them.” 

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