Deal Cancelled: BitGo Pulls Out of Prime Trust Acquisition and Users Report Withdrawal Issues

BitGo, the American crypto custodian platform, has made the decision to cancel the acquisition of Prime Trust. 

Following this announcement, Prime Trust has taken measures to suspend withdrawals.

The cancellation of the deal comes just two weeks after BitGo signed a non-binding letter of intent to acquire Prime Trust.

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 (@BitGo) June 22, 2023

The intended acquisition of Prime Trust by BitGo was expected to provide financial support to Prime Trust, which has been facing bankruptcy challenges.

Earlier this month, Banq, the payments subsidiary of Prime Trust, filed for bankruptcy protection in the United States. 

According to the bankruptcy filing, Banq has assets totaling $17.72 million and liabilities amounting to $5.4 million.

Prime Trust Finds No Relief  

Prime Trust has faced challenges recently, including replacing CEO Tom Pageler in November and staff layoffs in January. 

Adding to this, last year, crypto lending firm Celsius filed a pair of lawsuits to recover funds as it dealt with bankruptcy. Prime Trust was one of the targets in the lawsuits. 

Celsius alleged that Prime Trust improperly withheld the tokens when the two terminated their contract in June 2021.

In August last year, Prime Trust agreed to pay back crypto tokens worth $17 million to Celsius. 

TrueUSD Denies Exposure to Prime Trust

After reports emerged of Prime Trust suspending deposits and withdrawals on Thursday, TUSD issuer TrueUSD assured its customers that it has no exposure to the troubled crypto firm.

The USD-backed stablecoin issuer also stated that it no longer uses Prime Trust to mint or redeem the TUSD stablecoin and maintains “multiple USD rails” elsewhere. 

PrimeTrust has suspended all deposits of fiat and digital assets. #TrueUSD (#TUSD) is not affected by this situation. We have no exposure to Prime Trust and maintain multiple USD rails for minting and redemption. Rest assured, all your funds are safe with TUSD.

— TrueUSD (@tusdio) June 22, 2023

While TUSD issuer distanced itself from the troubled crypto custodian platform, crypto exchange CoinMetro had to suspend USD withdrawals on its platform as it uses Prime Trust as its payments partner. 

The exchange announced on Twitter that it has already started working on adding alternative payment partners to its ecosystem.