Banq, a subsidiary of the troubled crypto custodian Prime Trust, has filed for bankruptcy in a U.S. bankruptcy court in Nevada.
Banq has chosen to file for Chapter 11 bankruptcy in the Nevada division of the U.S. bankruptcy court.The company values its assets at approximately $17.72 million, while its liabilities exceed $5.4 million.
The bankruptcy filing revealed that an “unauthorized transfer” of assets totaling $17.5 million was made to the Fortress NFT Group, established by three former top executives of Banq, including its founder Scott Purcell.
In May 2022, Banq initiated a lawsuit against Purcell, George Georgiades (former chief legal officer of Prime Trust), Kevin Lehtiniitty (Fortress NFT Group), and Planet NFT, accusing them of stealing the company’s trade secrets, unique technology, and assets.
However, in January 2023, a U.S. judge approved the defendants’ request for arbitration based on the arbitration clauses in the individual defendants’ employment agreements.
Prime Trust in financial trouble?
Banq’s decision to file for bankruptcy came shortly after Bitcoin custodian BitGo announced its intention to acquire Prime Trust’s parent company. In response to concerns about Prime Trust’s financial situation, BitGo signed a non-binding term sheet to achieve the entire equity of Prime Core Technologies.
Furthermore, TrueUSD recently announced that it would halt minting TUSD on Prime Trust, thereby disconnecting TUSD from its peg. However, stablecoin minting and redemption would continue through its other banking partners. Reports indicate that Prime Trust laid off one-third of its workforce in January.
