Prime Trust's acquisition bid rejected, regulatory agency orders shutdown: Financial situation severely deteriorated.

The stablecoin TrueUSD (TUSD) announced in early June that it would temporarily suspend minting through Prime Trust as stated here. Additionally, the digital asset custodian company BitGo's statement halting the acquisition of Prime Trust, along with orders from the regulatory authorities in Nevada, all point to Prime Trust's financial condition having severely deteriorated.

Nevada Department of Business and Industry: Prime Trust Insolvent

The order document from the Nevada Department of Business and Industry states that the custodial institution Prime Trust is facing a "shortage of user funds," unable to meet withdrawal demands for the month, ordered to cease all activities violating Nevada regulations, emphasizing that Prime Trust's financial issues have deteriorated to a critically insufficient level.

The document mentions:

Prime Trust is operating with a significant deficit, potentially to the point of insolvency. As of around June 21, 2023, the substantial liabilities on the defendant's balance sheet have led to a shortage of user funds, inability to redeem user withdrawals, and are in violation of Nevada trust laws due to the inability to operate normally.

Prime Trust Halts Deposits and Withdrawals

Prime Trust has not made any statements on Twitter, but its fiat payment service provider Stably has issued a notice, relaying the notification received from Prime Trust about the suspension of deposits and withdrawals:

Prime Trust has ceased all fiat and digital asset deposit and withdrawal services based on orders received from the Nevada Department of Financial Institutions. Please refrain from sending user assets for custody to Prime Trust, especially digital assets. We are actively engaging with Nevada authorities to determine the next steps.

Prime Trust may request a hearing within 30 days of receiving the order. Failure to do so will result in the termination order being deemed final.

BitGo CEO: Prime Trust Unable to Complete Transactions

BitGo, which also offers custodial services, had previously attempted to acquire Prime Trust but ultimately terminated the deal. BitGo CEO Mike Belshe revealed Prime Trust's dire financial situation in an interview with Fortune:

After signing a letter of intent with Prime Trust and conducting due diligence two weeks ago, it was clear that Prime Trust did not have the financial condition necessary to complete the transaction. State regulators would require them to freeze assets because when problems arise, they must intervene and resolve them.

In fact, despite raising $107 million in funding just last June, Prime Trust's situation took a sharp downturn thereafter. In August last year, it was accused of asset theft by the lending platform Celsius, laid off about 30% of its workforce in January this year, and its subsidiary Banq filed for bankruptcy protection in early June.

Mike Belshe also emphasized that BitGo's decision was unrelated to TUSD, with TUSD stating that they had no exposure to Prime Trust and maintained various USD stablecoin minting and redemption standards.