3 - 5 minute read
Banq, a subsidiary of Prime Trust, a cryptocurrency custodian, has filed for bankruptcy in a US bankruptcy court in Nevada. The company has cited approximately $17.72 million in assets against $5.4 million in liabilities. This comes as Prime Trust is in the process of closing an acquisition deal with BitGo after facing a financial crisis as a result of the Celsius bankruptcy. Meanwhile, TrueUSD, which has a banking relationship with Prime Trust, has paused stablecoin mints and redemptions due to “Prime Trust’s bandwidth issues.”
Haru Invest, a South Korean crypto yield firm, has also put a pause on withdrawals and deposits citing difficulties with an unnamed service provider, which is thought to be Banq or Prime Trust. Banq has further noted in its filing that $17.5 million in assets were taken in an “unauthorized transfer” by former officers, consisting of trade secrets, as well as proprietary information and technology, to Fortress NFT Group.
Fortress NFT Group was founded by Banq’s former CEO, CTO, and CPO. Banq has sued Fortress for allegedly stealing trade secret information to launch rival NFT platforms, Fortress NFT and Planet NFT. Banq has further alleged that they engaged in fraudulent activities to cover up their misconduct.
According to a suit filed by Banq against the trio, Scott Purcell, its former CEO, attempted to pivot Banq towards NFTs. Facing pushback from its board and shareholders, Purcell founded Fortress NFT and then sold Banq’s computers, intellectual property, and corporate infrastructure to the new company. In early 2023, a Judge ordered the case to go to arbitration as Purcell and the other defendants in the case signed arbitration clauses.
The bankruptcy filing by Banq raises questions about the stability of the cryptocurrency market, with traders potentially facing risks and opportunities. The situation may also have implications for the ongoing acquisition deal between Prime Trust and BitGo, which may face delays or renegotiation.
Traders should keep a watchful eye on the developments in this case, as it may affect the market’s perception of cryptocurrency custody and related services. It is recommended that traders maintain a cautious approach and stay informed of any updates related to the case.
The Bottom Line
The bankruptcy filing by Banq, a subsidiary of Prime Trust, raises concerns about the stability of the cryptocurrency market. Traders should remain cautious and informed of any developments related to this case, as it may impact the market’s perception of cryptocurrency custody services.
