Nevada Sought Prime Trust Receivership After Disclosing $82.8 Million Fiat Gap

Nevada’s Financial Institutions Division petitioned the Eighth Judicial District Court of Nevada on June 26, 2023 to appoint a receiver over Prime Trust LLC and related entities. The regulator alleged that the cryptocurrency custodian was insolvent or operating in an unsafe or unsound condition, and asked the court to freeze business activity and preserve assets while a receiver examined whether the company could be rehabilitated or should be liquidated.

The filing was a request for judicial relief, not an order granting receivership. That distinction mattered on June 26: Prime Trust’s boards had consented to receivership, but the court still had to act. The petition nevertheless exposed a severe custody shortfall through figures that Prime Trust interim chief executive Jor Law declared matched reports prepared from company records.

A large fiat hole, plus a smaller crypto deficit

At or around the filing, the petition said Prime Trust owed clients approximately $85.670 million in fiat currency while holding approximately $2.904 million in fiat. The difference was approximately $82.766 million. For digital assets, converted to U.S. dollars and rounded to the nearest thousand, the filing listed approximately $69.509 million owed and approximately $68.648 million held, a gap of approximately $861,000.

Those are balance-sheet snapshots alleged in a regulatory petition, not audited financial statements or market valuations independently reconstructed by Coinburn. The filing said its monetary references were approximate unless otherwise specified. It did not identify the valuation timestamp, price sources, token-by-token inventory, bank-account composition or customer-level claims. Because digital assets trade continuously across venues, the dollar conversion cannot establish how many units were available or what they could have realized in an orderly sale.

The regulator also cited a negative $12,071,508 stockholders’ equity position in Prime Trust’s NMLS Money Service Business Call Report. The petition did not reproduce the underlying report or specify its measurement date in the cited passage, so the figure supports the regulator’s solvency case but does not permit an independent reconciliation.

The legacy-wallet account

The petition traced part of the problem to custody operations. It said Prime Trust began holding cryptocurrency for clients in 2018, contracted with Fireblocks in 2019, and completed a migration to that platform in 2020 while retaining an original wallet marked inactive.

According to the regulator, Prime Trust reintroduced certain legacy forwarding addresses in January 2021, believing they were on or forwarded to accessible Fireblocks wallets. The company allegedly discovered around December 2021 that it could not access the legacy wallets or their cryptocurrency. From December 2021 through March 2022, the petition said, Prime Trust bought replacement digital currency using customer money from omnibus accounts to meet withdrawals from those inaccessible wallets.

These were allegations supported inside the filing by the commissioner’s affidavit and Law’s declaration. The record did not disclose the affected addresses, assets, acquisition cost or amount stranded. Fireblocks told CoinDesk after the filing that the legacy wallets were controlled by Prime Trust and were not Fireblocks wallets. That statement narrowed responsibility but did not independently quantify the loss.

Why the petition mattered

Prime Trust was a Nevada-domiciled retail trust company with a business-to-business-to-consumer model serving cryptocurrency and fintech clients. A shortfall at that layer could transmit operational problems to companies that depended on the custodian for holding or moving customer assets.

Nevada had already ordered Prime Trust on June 21, 2023 to stop accepting fiat and cryptocurrency from existing and new clients for custody. The June 26 petition escalated from administrative restriction to a request for court-supervised control. It sought to bar officers, employees and other insiders from moving funds or conducting further business except under a receiver’s direction.

The strongest conclusion available from the June 26 record is therefore narrow: Nevada sought emergency judicial control after documenting approximate deficits and an inaccessible-wallet account, while Prime Trust consented to the proposed receivership. The petition did not establish customer recoveries, final losses, criminal liability or a court-approved outcome.