The recent announcement by American crypto custodian platform BitGo to cancel the acquisition of Prime Trust has created ripples within the crypto community. As a result, Prime Trust has swiftly taken action by suspending withdrawals on its platform. This only adds to the recent challenges faced by the company, which many hoped would be mitigated by a financial partnership.
Initially, BitGo’s acquisition of Prime Trust seemed like a positive development for the struggling entity. The deal was intended to provide much-needed financial aid to Prime Trust, a company trying to stay afloat amidst a series of bankruptcy challenges. However, the sudden cancellation of the deal, merely two weeks after BitGo signed a non-binding letter of intent, leaves Prime Trust scrambling for alternative solutions.
Adding to this strain, Banq, the payments subsidiary of Prime Trust, filed for bankruptcy protection earlier this month. With assets worth $17.72 million and liabilities of $5.4 million, the company has its work cut out for it. Prime Trust’s recent challenges have included the replacement of CEO Tom Pageler last November, as well as staff cutbacks in January.
Even further back, Prime Trust found itself at the center of a legal battle with crypto lending firm Celsius in 2021. Celsius accused the company of improperly withholding tokens when the two entities terminated their contract. This dispute eventually led to Prime Trust agreeing to pay back $17 million worth of crypto tokens to Celsius.
In light of these hardships, one may question whether it’s still possible for Prime Trust to bounce back. As news of the company’s suspension of deposits and withdrawals surfaced, TrueUSD (TUSD) issuer sought to distance itself from the embattled firm. Reassuring its customers that they have no exposure to Prime Trust and do not rely on them for minting or redeeming the TUSD stablecoin, the company emphasized its utilization of “multiple USD rails” for operations.
Meanwhile, the crypto exchange CoinMetro has been forced to suspend USD withdrawals on their platform due to their association with Prime Trust as a payments partner. In response, CoinMetro stated via Twitter that they are actively working to incorporate alternative payment partners into their ecosystem.
In summation, BitGo’s decision to cancel its acquisition of Prime Trust leaves the already struggling company with limited options for financial recovery. While some industry players are quick to distance themselves from the beleaguered firm, the fate of Prime Trust remains uncertain. As withdrawal suspensions and legal disputes cast a shadow on the company’s future, the broader implications for the crypto market, customers, and partners are left hanging in the balance.
Source: Cryptonews
