Prime Trust, a crypto custodian based in Las Vegas, and its affiliated entities have filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. This move comes as the company faces financial challenges and operational difficulties, including the loss of clients and regulatory scrutiny.

The bankruptcy filing follows the appointment of John Guedry as the receiver for Prime Trust and the establishment of a special restructuring committee. The company plans to continue managing its business as “debtors-in-possession” under the guidance of this committee.

Prime Trust began offering services to cryptocurrency firms in 2018, positioning itself as a custodian to safeguard digital assets. However, recent setbacks have contributed to its financial struggles. Notably, the company lost clients, including the cryptocurrency exchange Binance.US, which faced legal action from the U.S. Securities and Exchange Commission earlier this year.

In an effort to address its challenges, Prime Trust’s leadership attempted to sell the company. In June, BitGo, another crypto custodian, announced a preliminary agreement to acquire Prime Trust. However, this deal was later retracted.

The bankruptcy filing reveals that Prime Trust’s estimated liabilities range from $100 million to $500 million, while its estimated assets are valued between $50 million and $100 million. The company has a significant number of creditors, with the count ranging from 25,001 to 50,000.

As part of its bankruptcy proceedings, Prime Trust intends to explore strategic alternatives, including the potential sale of its assets and operations. The company may also seek approval from the court to continue paying wages and providing benefits to ongoing employees.

Prime Trust’s bankruptcy filing highlights the challenges and uncertainties faced by crypto custodians as they navigate regulatory pressures, market dynamics, and evolving client needs within the cryptocurrency industry.