In an interview with Fortune, BitGo CEO Mike Belshe said that after signing a letter of intent with Prime Trust and conducting due diligence, it became clear that Prime Trust did not have the necessary funding to complete it.
“Unfortunately, two weeks ago, Prime Trust investors were not objective about the state of their business. They just didn’t have enough finances to meet all the conditions we agreed to for the deal. It may not be easy for them, but we’re not a charity,” Belshe said.
According to Fortune reporters, Prime Trust is experiencing an acute liquidity crisis, and the new management team that took over the business last November has been unable to fundamentally fix the situation.
Following BitGo’s official notification of the deal’s termination, Prime Trust informed its users that it has stopped fiat and digital currency withdrawals. The basis for the asset freeze and restrictions was an order from the Nevada Division of Financial Institutions.
The official order issued by the Nevada regulator states that Prime Trust faced critical financial distress that resulted in the inability “to make customer withdrawal transactions due to a shortage of funds caused by a significant liability on respondents’ balances.”. As such, the regulator is terminating Prime Trust for breach of fiduciary duty.
During an interview with Fortune, BitGo CEO Mike Belshe declined to provide reporters with more details about what was discovered during Prime Trust’s business due diligence, but clarified that BitGo’s decision was not related to a problem in Prime Trust’s relationship with TrueUSD.