Prime Trust subsidiary Banq files for bankruptcy amid BitGo acquisition deal

Payment subsidiary of crypto custodian Prime Trust Banq filed for bankruptcy in the United States on June 13, according to court documents.

The move comes just days after the wallet infrastructure provider and digital asset custodian BitGo signed a non-binding letter of intent to acquire Prime Trust, which was announced on June 8.

bankruptcy of bank presentation it listed $17.72 million and liabilities of $5.4 million and cited the "unauthorized transfer" of $17.5 million in assets to the Fortress NFT Group, as well as the wrongful transmission of trade secrets and proprietary information to Fortress.

Excerpt from Banq's bankruptcy filing detailing summary of assets and liabilities.

Fortress NFT Group was created by Banq's former CEO, CTO and CPO, reports say, and Banq is currently in arbitration with Fortress NFT Group over these allegations.

The timing of the filing, just after the BitGo acquisition deal from Banq's parent company Prime Trust was announced, raises questions about how it might affect the deal.

While the terms of the deal were not disclosed, if it goes through, BitGo will acquire Prime Trust's payment rails and cryptocurrency IRA fund and increase its wealth management offerings.

Prime Trust's Nevada Trust Company will also join BitGo's network of regulated trust companies in South Dakota, New York, Germany and Switzerland. Prime Trust's API infrastructure and exchange network will be "mapped 1:1" with BitGo's services. BitGo stated:

“This acquisition makes BitGo the first global digital asset company to provide a full suite of solutions for fintech institutions and platforms.”

The crypto custody market is rapidly evolving, with recent deals including the acquisition of Ripples Swiss digital asset custody provider Metaco in May for $250 million.

The BitGo/Prime Trust deal, if it goes ahead, comes just as the United States Securities and Exchange Commission has proposed rule changes that would make it more difficult for cryptocurrency firms to act as custodians of their clients' funds.

Related: Prometheum Subsidiary Receives FINRA Approval for Qualified Custody of Digital Assets

Prime Trust has been under pressure for a while, reportedly laid off a third of its staff in January. Later, intervened to sustain Binance.US customer funds through a network of partner banks after the March banking crisis.

It was him center of a scandal in the US state of Oregon last year when he was identified as the source of a $500,000 contribution to the state's Democratic Party that later turned out to come from FTX executive Nishad Singh.

Last year, BitGo was on the verge of being acquired by Galaxy Digital for $1.2 billion and sued Galaxy for breach of acquisition after the deal was called off.

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