In a major development, Banq, a subsidiary of crypto custodian Prime Trust, has filed for bankruptcy amid mounting financial difficulties. The filing has revealed that Banq holds approximately $17.72 million in assets but is burdened with liabilities totaling $5.4 million. This significant turn of events casts a shadow over Prime Trust’s acquisition deal with BitGo, particularly in the wake of the recent Celsius bankruptcy, raising concerns within the industry.
The troubles faced by Banq have far-reaching consequences, as they spill over to impact TrueUSD, a stablecoin associated with Prime Trust. The creation and redemption of TrueUSD stablecoins have come to a halt, citing “Prime Trust’s bandwidth issues.” Furthermore, operational disruptions have also been reported at Haru Invest, a South Korean crypto yield firm, allegedly caused by a cryptic service provider, rumored to be either Banq or Prime Trust.
Internally, Banq has made disturbing allegations concerning an “unauthorized transfer” orchestrated by former officers, resulting in the diversion of $17.5 million in assets to Fortress NFT Group. This misappropriation encompasses valuable trade secrets, proprietary information, and advanced technology. Consequently, legal action has been taken against the ex-CEO, CTO, and CPO, who stand accused of stealing assets and launching competing NFT platforms.
Adding to the twists and turns of this case, Banq and Fortress NFT Group have opted to settle their disputes through arbitration. This unexpected development steers the proceedings away from traditional litigation, with an arbitration process now set to resolve the contentious issues between the parties involved.
As the bankruptcy proceedings of Banq unfold, the entire crypto custodial landscape remains on high alert, keenly observing the situation and assessing its potential impact on Prime Trust and the industry as a whole. This ongoing saga underscores the vital importance of transparency and robust security measures in the ever-evolving digital asset realm. It serves as a stark reminder that stringent protocols are necessary to safeguard assets and address risks within the crypto custodial space.
Compiled by Coinbold