BitGo has decided to pull off from the acquisition of Prime Trust after early negotiations earlier this month.
On Thursday, June 22, popular cryptocurrency custodian BitGo made an announcement that it has decided to cancel the acquisition of its rival Prime Trust. The decision comes only in a few days after the two parties reached a preliminary agreement on the acquisition for an undisclosed amount.
In their Twitter announcement on Thursday, BitGo noted:
“After considerable effort and work to find a path forward with Prime Trust, BitGo has made the hard decision to terminate its acquisition of Prime Trust. This decision was not made lightly and BitGo remains committed to our mission to deliver trust in digital assets.”
BitGo and Prime Trust were considering a deal, but the specific details were not shared publicly. If the acquisition had happened, BitGo would have gained access to Prime Trust’s payment system and cryptocurrency IRA fund. It would have also allowed BitGo to offer a wider range of wealth management services. Additionally, integrating Prime Trust’s Nevada Trust Company into BitGo’s network of regulated trust companies would have been a significant expansion for the company.
There were rumors on Twitter that the deal was canceled because Prime Trust received a cease-and-desist order from Nevada state regulators. However, these rumors could not be confirmed at the moment.
🚨🚨SCOOP: PRIME TRUST RECEIVED CEASE AND DESIST ORDER FROM NEVADA STATE REGULATORS.
— DIRTY BUBBLE MEDIA: GOOD LUCK, GOOD BYE. (@MikeBurgersburg) June 22, 2023
Prime Trust in Deep Waters
Over the past few months, Prime Trust has gone through a rocky journey while staring at bankruptcy. Last November 2022, the company replaced Tom Paegler as its CEO. Earlier this year in January 2023, Prime Trust laid off nearly a third of its staff. Just last week, Prime Trust subsidiary Banq also filed for bankruptcy.
Banq filed for bankruptcy and disclosed that it had assets worth $17.72 million but owed $5.4 million. This happened shortly after BitGo had expressed interest in acquiring Prime Trust on June 8. It’s not clear if the timing of the bankruptcy filing affected BitGo’s plan to acquire Banq’s parent company.
Prime Trust has also faced challenges recently, such as laying off a third of its staff in January. Additionally, it was involved in a scandal in Oregon last year. It was discovered that Prime Trust had made a $500,000 contribution to the state Democratic Party, which was later linked to a former FTX executive named Nishad Singh.