DISCLAIMER: The information in this article is based on a single source who did not confirm it directly and should not be considered 100% true until verified using primary sources.
“Major custodian is about to declare bankruptcy without last minute bailout. Take your Bitcoin off exchanges, even bitcoin only platforms,” said David Bailey, CEO of Bitcoin Magazine on Twitter yesterday.
Today, Bailey provided more details on the situation on Twitter Spaces discussion without directly exposing the custodians name.
“The only reason I don’t want to say the firm’s name and…you know…if you go read the comments…ha…it does seem like…it does seem to be consensus around this probably already…”Many people in the comments as well as on related discussion threads noted that the most likely custodian in this case is Prime Trust.”The only reason I didn’t wanna say a company name is because they’re not dead yet, and the information that I have is that they need to receive $25 million dollars in funding by the start of business on Monday so, you know, that’s five days from now, two business days from now and two days over the weekend, so… A lot could happen in four days, and so…I don’t want to permanently damage the company’s name while they still have a fighting chance,” Bailey continued on Twitter Spaces.”Unlike maybe an exchange going under, a custodian going under is a bit more unique because they power a lot different platforms.””This particular company, they are a custodian to a lot of platforms…I don’t know how many are still clients, I know they’ve been under distress for awhile. I think it got to a critical situation after the FTX blow up, and I know that they’ve been kind of peeling off customers and losing them since because that distress was known.””It does seem like the events of the past couple days have accelerated things,” Bailey added.
Prime Trust used to be a major custodian in the space but the company has been in decline for some time now. Earlier this year the company laid off one-third of its staff and ceased operations in Texas, as well as changed numerous CEOs.
While it is not yet precisely known which companies may be affected by the company’s collapse, Twitter independent journalist Pledditor made a quick comparison between Prime Trust client list on the company’s website a year ago and today.
Last week, Swan, one of the major clients of Prime Trust, announced a platform upgrade and reportedly moved customer funds from the platform to other qualified custodians such as BitGo Trust Company and Fortress Trust.Some people pointed out that the founder of Prime Trust is now the founder and CEO of Fortress.