Cryptocurrency custodian BitGo announced canceling its planned acquisition of rival company Prime Trust. The decision comes shortly after the two entities had reached a preliminary agreement, leaving the industry speculating about the reasons behind this unexpected development.
BitGo’s Twitter Announcement:
BitGo took to Twitter on June 22 to share the news, stating that despite their efforts, they have made the difficult decision to terminate the acquisition of Prime Trust. The custodian emphasized its unwavering commitment to delivering trust in digital assets.
Potential Benefits Lost:
Had the acquisition gone through, BitGo would have gained access to Prime Trust’s payment system and cryptocurrency IRA fund. It would have expanded BitGo’s range of wealth management services and integrated Prime Trust’s Nevada Trust Company into its network of regulated trust companies, representing a significant growth opportunity.
Unconfirmed Rumors:
Rumors circulated on Twitter suggesting that the deal fell due to a cease-and-desist order from Nevada state regulators targeting Prime Trust. However, at present, these rumors remain unconfirmed and lack concrete evidence.
Prime Trust’s Rocky Journey:
Prime Trust has recently faced a turbulent journey, including replacing its CEO in November 2022 and significant staff layoffs in January 2023. Last week, its subsidiary Banq filed for bankruptcy, revealing assets worth $17.72 million and debts of $5.4 million. The timing of this bankruptcy filing, coinciding with BitGo’s interest in acquiring Prime Trust, raises questions about its impact on the acquisition plans.
Challenges Faced by Prime Trust:
Aside from financial struggles, Prime Trust has also encountered other difficulties, such as the aforementioned staff layoffs in January. The company was also involved in a scandal in Oregon last year, as it was revealed that a $500,000 contribution to the state Democratic Party was linked to a former FTX executive named Nishad Singh.
BitGo’s decision to cancel the acquisition of Prime Trust marks a significant twist in the crypto custodian industry. The reasons behind the termination remain unclear, as unconfirmed rumors circulate about regulatory issues faced by Prime Trust. Nonetheless, both companies will now need to reassess their strategies and navigate the evolving landscape of the cryptocurrency market.
