In a cease and desist order, the Nevada Department of Business and Industry’s Financial Institutions Division (FID) found that Prime Trust’s overall financial condition had deteriorated to a critically deficient level. 

The FID ordered Prime Trust to cease all activities which are in violation of Nevada regulations. The firm has 30 days to petition for a hearing on the order, after which it will be deemed final. 

“On or about June 21, 2023, Respondent was unable to honor customer withdrawals due to a shortfall of customer funds caused by a significant liability on the Respondent’s balance sheet owed to customers,” wrote the Nevada regulator. 

“Additionally, Respondent failed to safeguard assets under its custody and is unable to meet all customer withdrawals.”

The regulator also claimed that Prime Trust is operating with a stockholders equity position of negative $12 million, has failed to pay tax and effectively become insolvent. 

A spokesperson for the Nevada FID told CoinDesk that the cease and desist order was issued on June 21. Shortly after, crypto custody firm BitGo announced that it would be terminating its acquisition of Prime Trust. 

Trading platform Coinmetro and stablecoin issue TrueUSD, two firms that use Prime Trust as their payment partner, reported that the firm had suspended U.S. dollar deposits and withdrawals.

Prime Trust raised $64 million in Series A funding in 2021, followed by a $107 million Series B round in 2022. Since then, the company has faced a series of challenges, laying off a third of its workforce in January and its payment-processing subsidiary Banq filing for bankruptcy last week.