Financial regulators in Nevada issued a cease and desist order against Prime Trust on June 21 after monitoring the company for solvency.
In an email to CryptoSlate, the Nevada Financial Institutions Division (NFID) said it monitored the solvency of Prime Trust prior to a possible acquisition or merger.
BitGo was expected to acquire Prime Trust before it abandoned the deal on June 22.
The NFID said that Prime Trust failed to safeguard assets under custody and could not fulfill client withdrawals. It said that its cease and desist order will prevent Prime Trust from accepting fiat currency and crypto from current and new clients.
The cease and desist order itself states that Prime Trust’s financial state has “deteriorated to a critically deficient level.” It says that the firm is now in an “unsafe and unsound condition” and is “at a substantial deficit and/or is insolvent.”
Furthermore, it says that Prime has “materially and wilfully” breached its duties to clients. Prime Trust has 30 days to request an administrative hearing.
Stablecoin firm Stably also said that it would pause minting and user withdrawals today as a result of the incident. It relied on Prime Trust as a custodian.
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