Banq, a subsidiary of the Nevada-based crypto custodian Prime Trust, has filed for bankruptcy in a US bankruptcy court in Nevada, shortly after BitGo signed a letter of intent to purchase Prime Trust’s parent company.
Banq files for bankruptcy with $5 million in liabilities
Banq filed for Chapter 11 bankruptcy in the U.S. bankruptcy court in the district of Nevada, with the filing stating that the firm has around $17.72 million in assets and liabilities worth over $5.4 million.
The bankruptcy filing also noted that $17.5 million worth of assets were sent to Fortress NFT Group founded by three of Banq’s former top executives including the firm’s founder Scott Purcell, in an “unauthorized transfer.”
Banq previously filed a lawsuit against Purcell, Prime Trust’s former chief legal officer George Georgiades, another ex-Prime Trust executive Kevin Lehtiniitty, Fortress NFT Group, and Planet NFT in May 2022, claiming they stole Banq’s trade secrets, proprietary technology, and corporate assets.
However, in January 2023, a U.S. judge granted the defendants’ motion to compel arbitration, “based on arbitration clauses in employment agreements each of the individual defendants signed.”
Prime Trust facing insolvency crisis?
Banq’s bankruptcy filing comes shortly after the cryptocurrency custodian BitGo announced intentions to acquire Prime Trust’s parent company. BitGo signed a non-binding term sheet to buy the full equity of Prime Core Technologies amid rumors that Prime Trust is experiencing financial issues.
TrueUSD also recently announced that it was halting TUSD minting on Prime Trust until further notice causing TUSD to briefly depeg while stating stablecoin minting and redemption through its other banking partners remain intact. In January, Prime Trust reportedly laid off one-third of its workforce.