Prime Trust’s subsidiary, Banq, recently filed for bankruptcy after signing a non-binding letter of intent for an acquisition deal with digital asset custodian BitGo. The court documents on June 13th show that Banq filed for bankruptcy protection in the United States due to the unauthorized transfer of $17.5 million in assets to Fortress NFT Group and an illicit transmission of trade secrets and proprietary information to Fortress. This timing, just after the BitGo acquisition deal involving Banq’s parent Prime Trust, raises questions about how it might affect the agreement.
If the deal is successful, BitGo will acquire Prime Trust’s payment rails and cryptocurrency IRA fund, enhancing its wealth management offerings. Also, Prime Trust’s Nevada Trust Company is set to join BitGo’s network of regulated trust companies in South Dakota, New York, Germany, and Switzerland. Prime Trust’s API infrastructure and exchange network will “map over 1:1” with BitGo services.
While the terms of the deal have not been revealed, the crypto custody market is rapidly changing, making it difficult for crypto companies to act as custodians of their customers’ funds. Earlier this year, Ripple acquired Swiss digital asset custody provider Metaco for $250 million.
Nevertheless, Prime Trust’s performance has been under the spotlight for some time. The company was responsible for holding Binance.US customer funds through a network of partner banks in March after the banking crisis. Prime Trust was also at the center of a scandal in Oregon when it was identified as the source of a $500,000 contribution to the state Democratic Party that was later revealed to have come from FTX executive Nishad Singh.
BitGo itself faced a legal battle with Galaxy Digital for a $1.2 billion acquisition breach last year after the deal was canceled. The future of the BitGo/Prime Trust agreement might be unclear, but with the Prime Trust’s payment subsidiary filing for bankruptcy and ongoing issues with Fortress NFT Group, the skeptic may question the viability of this partnership in such a rapidly changing crypto custody space.
In conclusion, the recent Banq bankruptcy filing and its potentially rocky relationship with BitGo raises crucial questions about the future of this acquisition and how it might impact the crypto custody market. The outcome of this situation will be closely watched by those in the industry as it unfolds.
Source: Cointelegraph
