The failed acquisition deal between Bitgo and Prime Trust has caused a ripple effect in the crypto industry, as firms associated with the custodian face significant challenges. Stably, a fintech startup based in Seattle, recently announced the temporary pause of certain services and operations. Similarly, Strike, a bitcoin payments platform, is reportedly grappling with difficulties and has suspended direct deposits.
Stably’s decision to halt services is a direct result of the disruptions caused by Prime Trust. The custodian itself has become a prominent topic of discussion on crypto forums and social media as it has suspended withdrawals and deposits. This information was confirmed by customers who relied on Prime Trust’s services. Stably shared these details through a blog post, which included a letter from Prime Trust stating that the company received an order from the Nevada Financial Institution Division. Prime Trust expressed optimism about returning to normal operations as soon as possible.
The inconvenience faced by Stably has compelled the company to suspend the majority of its services temporarily. On the other hand, TUSD, a stablecoin issuer, reassured its customers that it remains unaffected by the situation, despite conducting business with both Prime Trust and Bitgo. TUSD clarified on Twitter that Prime Trust had suspended all deposits of fiat and digital assets but emphasized that it had no exposure to Prime Trust and maintained multiple USD rails for minting and redemption. Thus, TUSD assured its users that their funds are secure.
According to an official report from the Nevada Financial Institution Division, Prime Trust encountered a severe financial crisis around June 21, 2023, resulting in its inability to honor customer withdrawals due to a shortfall of customer funds. The division stated that Prime Trust had violated its fiduciary obligations, leading to a mandate to cease all business operations. Strangely, Prime Trust has refrained from addressing the issue on Twitter.
Prime Trust had collaborated with various companies, including Abra, Augeo, Swan Bitcoin, Binance US, Dapper Labs, and Strike. Swan Bitcoin had already announced its plans to move assets from Prime Trust to Bitgo and Fortress Trust before the Bitgo acquisition fell through. Additionally, Prime Trust’s subsidiary, Banq, filed for Chapter 11 bankruptcy protection just before the deal collapsed.
There are reports suggesting that Strike, the bitcoin payments company, is also experiencing challenges due to its association with Prime Trust. A customer claimed to have received an email from Strike, stating the suspension of direct deposits and temporary disruptions in card services. However, Strike’s status page currently indicates that all services are operational. As a result, the crypto community is actively trying to determine which firms have direct exposure to Prime Trust.
The suspension of services by Prime Trust has undoubtedly had a significant impact on the crypto industry. It has caused disruptions for affiliated firms, leading to temporary service suspensions and operational challenges. The situation has raised concerns among the crypto community, prompting discussions and speculation about the direct implications for various companies. Feel free to share your thoughts and opinions on this subject in the comments section below.
Frequently Asked Questions (FAQs) about crypto industry turmoil
What caused the turmoil in the crypto industry?
The turmoil in the crypto industry was caused by the fallout between Bitgo and Prime Trust, resulting in disruptions and concerns for crypto firms associated with Prime Trust.
Which crypto firms were affected by the Prime Trust fallout?
Stably, a fintech startup, and the bitcoin payments platform Strike were among the crypto firms experiencing difficulties and service disruptions due to their association with Prime Trust.
What services were temporarily paused by Stably?
Stably temporarily paused certain services and operations as a result of the disruptions caused by Prime Trust. The exact services affected were not specified in the provided information.
Has TUSD, the stablecoin issuer, been impacted by the situation?
TUSD clarified that it remained unaffected by the Prime Trust situation. They stated that despite conducting business with both Prime Trust and Bitgo, TUSD had no exposure to Prime Trust and assured its customers that their funds were safe.
Why did Prime Trust suspend withdrawals and deposits?
Prime Trust encountered a severe financial crisis that led to a shortfall of customer funds, making it unable to honor customer withdrawals. As a result, they suspended withdrawals and deposits.
How did the Nevada Financial Institution Division respond to Prime Trust’s situation?
The Nevada Financial Institution Division determined that Prime Trust had violated its fiduciary obligations and mandated the custodian to cease all business operations. This response was a result of Prime Trust’s critical financial predicament.
Did Prime Trust make any public statements regarding the issue?
Prime Trust refrained from making any Twitter announcements concerning the issue, despite the widespread discussion and concerns on crypto forums and social media.
Which other companies had collaborations with Prime Trust?
Prime Trust collaborated with several companies, including Abra, Augeo, Swan Bitcoin, Binance US, Dapper Labs, and Strike.
Is Strike facing challenges due to its association with Prime Trust?
There are reports suggesting that Strike, the bitcoin payments company, is facing challenges and disruptions as a result of its association with Prime Trust. However, Strike’s status page currently indicates that all services are operational, causing some confusion in the crypto community.
How has the crypto industry responded to Prime Trust’s suspension of services?
The crypto industry has been impacted by the service disruptions and concerns arising from Prime Trust’s situation. The community is actively discussing the implications for various companies and closely monitoring the developments in this regard.
More about crypto industry turmoil
- Prime Trust
- Nevada Financial Institution Division
- Swan Bitcoin
- Binance US
- Dapper Labs