By
Godfrey Benjamin
September 27th, 2023
Prime Trust and most of its associates have come under undue problems.
Prime Trust subsidiary Banq has filed for Chapter 11 bankruptcy protection in the United States District Court of Nevada. As reported by The Block, the decision to file comes only five days after the parent company reached an acquisition deal with BitGo due to its problems with embattled cryptocurrency exchange Celsius Network.
Based on the filing, Banq currently has about $17.72 million in assets and a total liability of $5.4 million.
According to its official website, Banq was established about three years ago as a platform that provides mobile SDKs [software development kits] on top of Prime Trust APIs for easy integration of all the crypto and fiat funding services. Its current predicament was contributed by the fact that former employees of the institution made away with assets worth approximately $17.5 million without authorization. These assets include commercial secrets and classified information and technology.
Ultimately, these assets were transferred to Fortress NFT Group, a company owned by Banq’s former Chief Executive Officer (CEO) Scott Purcell.
In response, Banq charged Fortress NFT Group for stealing trade secrets to establish two Non-Fungible Token (NFT) platforms: Planet NFT and Fortress NFT. Purcell had tried to turn Banq towards NFT, but when the latter refused, the former CEO sold Banq’s corporate infrastructure, computers, and intellectual property to his newly launched venture, Fortress NFT.
Additionally, the lawsuit stated that their theft of Banq’s corporate assets included taking the company’s seat licenses for Las Vegas Raiders’ games at Allegiant Stadium. This was all done without Board approval or knowledge. “Specifically, Defendant Purcell transferred the seat licenses owned by Banq to himself.”
Noteworthy, Purcell founded Fortress NFT Group with Banq former CTO and CPO.
Banq Bankruptcy: Challenges for Prime Trust Entities
Recently, Prime Trust and most of its associates have come under undue problems. Yesterday, Haru Invest, a South Korean crypto yield firm to which Prime Trust provides service, suspended deposit and withdrawal requests until further notice.
Although the firm did not initially share extensive details on the suspension, Haru Invest stated that “Recently, we have come across a certain issue with one of the service partners we have worked with. We are now further investigating the issue with them and seeking a contingency plan to rectify the situation.”
Later, an update was released informing the public that the company had begun an investigation and “discovered through our internal inspection process that certain information provided by a consignment operator was suspected to be false.” Haru Invest made no effort to name this operator as Banq or Prime Trust, however, there are suspicions that it could be.
Also, TrueUSD, which has a banking relationship with Banq’s parent Prime Trust decided to halt its stablecoin mint and redemption and has attributed the decision to “Prime Trust’s bandwidth issues”.