In a surprising turn of events, BitGo announced on Thursday that it has terminated its plans to acquire Prime Trust, a US-based crypto company that supports fiat to digital asset on- and off-ramps. The decision came after “considerable effort and work to find a path forward with Prime Trust,” according to BitGo’s tweet, citing ongoing problems with Prime Trust’s deposits as the primary reason for the deal falling apart.
The planned acquisition had been met with much anticipation, as Prime Trust offers crypto custodial services and was on the verge of securing millions of dollars in emergency financing. However, just after a tentative agreement had been reached with BitGo, Prime Trust found itself in a problematic financial situation. As a result, the company halted deposits of both fiat and digital assets, casting doubt on the completion of the acquisition.
This development left many wondering about the future of Prime Trust, especially given that BitGo had signed a term sheet to acquire the equity of Prime Trust’s parent company, Prime Core Technologies. However, the fate of Prime Trust remains uncertain, as the company has not yet commented on the issue. On the other hand, BitGo has not immediately responded to requests for comments, leaving many questions unanswered.
The termination of this acquisition has both pros and cons. On one hand, it showcases that the crypto industry is still in its early stages, and companies may face unexpected challenges and obstacles when expanding or diversifying their businesses. On the other hand, the termination could serve as a cautionary tale for other businesses in the space, urging them to be more careful and thorough in conducting due diligence processes before entering into major deals.
The sudden halt of Prime Trust’s deposits sheds light on the importance of regulation and oversight within the burgeoning crypto industry. The Nevada Financial Institution Division, which ordered Prime Trust to halt all deposits of fiat and digital assets on Wednesday, has not yet responded to requests for comments. Nevertheless, it is clear that any decision taken by regulatory authorities has significant implications on crypto businesses.
As we move forward, the termination of BitGo’s acquisition of Prime Trust raises questions about the future of mergers and acquisitions within the crypto industry, and particularly about the role of regulation and oversight in ensuring the stability and growth of the sector. While some may see this as a setback, others might argue that it highlights the need for more stringent checks and balances in place to safeguard the best interests of businesses and consumers alike.
Despite the skepticism surrounding this development, the terminated acquisition could open up new opportunities for both BitGo and Prime Trust. It is possible that each company may choose to take different strategic paths, leveraging their strengths individually rather than through a merger. This could ultimately lead to a more robust crypto industry in the long run, as companies continue to learn from their experiences and adapt to an ever-evolving market landscape.
Source: Blockworks
