Banq, a subsidiary of crypto custodian Prime Trust, filed for bankruptcy in the U.S. District Court of Nevada on June 13. Banq specializes in payment processing for cryptocurrency businesses.
In the bankruptcy filing, the firm listed assets of $17.72 million and liabilities amounting to $5.4 million.
The timing of the bankruptcy filing is notable, coming less than a week after Prime Trust’s parent company, Prime Core Technologies, was acquired by crypto custodian BitGo, pending regulatory approvals.
The acquisition could potentially impact the future of Banq and its relationship with Prime Trust.
“Unauthorized transfer” of $17.5 million
In the bankruptcy filing, Banq revealed that $17.5 million of its assets were sent to Fortress NFT Group in an “unauthorized transfer,” which may have contributed to the company’s financial troubles.
The filing further revealed that the unauthorized transfer by former Banq officers also included trade secrets and proprietary information.
Fortress NFT Group was founded by Banq’s former CEO, CTO, and CPO.
Banq has instigated legal action over allegations that the former C-suite employees stole trade secrets to launch Fortress NFT and engaged in fraud to cover their tracks.
In January, the court ordered all parties to resolve the matter in arbitration, which is still ongoing and could impact Banq’s bankruptcy outcome.
Prime Trust’s struggles
Prime Trust’s troubles began when Celsius sued the custodian in 2022 for allegedly withholding $17 million.
Stablecoin TrueUSD (TUSD), which uses Prime Trust as a banking partner, said last week that it was halting TUSD minting on Prime Trust until further notice.
TUSD temporarily lost its dollar peg following the announcement, causing concern among investors – but recovered its peg price within three days.
Following TUSD’s announcement, users reported issues with TUSD redemption, though the team assured operations were fine.
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