Crypto Unrest: BitGo’s Canceled Acquisition of Prime Trust and Its Impact on the Industry

June 26, 2023

Image Credit: Pexels

Crypto Unrest: BitGo’s Canceled Acquisition of Prime Trust and Its Impact on the Industry

BitGo, the American crypto custodian platform, has decided to cancel its planned acquisition of Prime Trust, leading to confusion and uncertainty for those involved with the latter. Following this announcement, Prime Trust has taken measures to suspend withdrawals, which has further added to the speculation concerning the company’s alleged financial challenges.

The intended acquisition of Prime Trust by BitGo was expected to provide financial support to Prime Trust, which has been facing bankruptcy challenges in recent times. The decision by BitGo to pull out of this deal has raised questions about Prime Trust’s financial health.

Prime Trust is a financial institution that offers custodial, escrow, and financial infrastructure solutions to its clients. Banq, the payments subsidiary of Prime Trust, filed for bankruptcy protection in the United States earlier this month. This has been a difficult time for the firm, which may ultimately struggle to recover from the damage caused to its reputation.

Prime Trust was also previously targeted in lawsuits filed by crypto lending firm Celsius last year. The fintech company was one of the targets of the lawsuits, with Celsius seeking to recover funds as it dealt with bankruptcy. Prime Trust agreed to pay back crypto tokens worth $17 million to Celsius in August 2022.

The recent announcements about Prime Trust’s financial issues have understandably left its clients feeling worried. After reports emerged of Prime Trust suspending deposits and withdrawals on Thursday, TUSD issuer TrueUSD took steps to assure its customers that it has no exposure to the troubled crypto firm. TrueUSD also stated that it no longer uses Prime Trust to mint or redeem the TUSD stablecoin and maintains “multiple USD rails” elsewhere.

On the other hand, crypto exchange CoinMetro had to suspend USD withdrawals on its platform as it uses Prime Trust as its payment partner. The exchange announced on Twitter that it has already started working on adding alternative payment partners to its ecosystem.

The financial turbulence experienced by Prime Trust has sent ripples across the cryptocurrency industry, raising concerns about the stability and security of digital assets. Questions have also been raised about the need for more robust regulations to protect digital asset investors from related risks.

In conclusion, the decision by BitGo to cancel the acquisition of Prime Trust has triggered a myriad of events that have left the latter company facing bankruptcy challenges. This comes after Banq, the payments subsidiary of Prime Trust, filed for bankruptcy protection in the United States. Such developments have resulted in considerable concern among both clients and investors, as they wait to see how the situation will unfold in the coming days. It is safe to say that this is a trying time for Prime Trust, and the company must take measures to address the present issues and restore confidence among its clientele.

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