BitGo cancels Prime Trust acquisition and users experience withdrawal issues.
BitGo, a platform that provides crypto custodian services in the US, has decided to cancel its acquisition of Prime Trust.
As a result of this announcement, Prime Trust has taken measures to pause withdrawals.
The cancellation of the deal occurred just two weeks after BitGo signed a non-binding letter of intent to acquire Prime Trust.
The proposed acquisition of Prime Trust by BitGo was expected to provide financial support to Prime Trust, which has been facing bankruptcy challenges.
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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 encountered recent challenges, such as replacing its CEO Tom Pageler in November and staff layoffs in January.
In addition, last year, cryptocurrency 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 claimed that Prime Trust improperly withheld tokens when the two terminated their contract in June 2021.
In August last year, Prime Trust agreed to repay cryptocurrency tokens worth $17 million to Celsius.
TrueUSD Denies Exposure to Prime Trust
After reports emerged of Prime Trust suspending deposits and withdrawals on Thursday, TrueUSD, a stablecoin issuer backed by the US dollar, assured its customers that it has no connection with the troubled cryptocurrency firm.
The stablecoin issuer also stated that it no longer uses Prime Trust to create or redeem the TUSD stablecoin and maintains “multiple USD rails” elsewhere.
While TrueUSD distanced itself from the troubled cryptocurrency custodian platform, cryptocurrency exchange CoinMetro was forced to pause 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.