Banq, a subsidiary of crypto custodian Prime Trust, has recently filed for bankruptcy in Nevada. In its bankruptcy petition, the company stated that it had roughly $17.72 million in assets and $5.4 million in liabilities.
Prime Trust, Banq’s parent business, has been struggling financially since the bankruptcy of Celsius. As a result, Prime Trust has been attempting to reach an agreement with BitGo in order to address this situation.
The bankruptcy petition comes as Banq’s activities have been hampered by internal issues with an undisclosed partner. The corporation claims that previous officers participated in an authorized fund transfer. Fortress NFT Group received $17.5 million in assets, including secrets and other information, from these funds.
Fortress NFT Group, founded by Banq’s former CEO, CTO, and CPO, is accused of launching a platform using stolen information. Banq has launched a lawsuit against Fortress, alleging fraudulent practices to conceal their wrongdoing.
BREAKING: 🚨Banq, a subsidiary of Prime Trust, files for #bankruptcy amidst financial crisis.
— Walletor (@walletorapp) June 14, 2023
Internal disagreements inside Banq, as well as the unauthorized transfer of corporate assets, exacerbated the issue. According to the lawsuit, Banq’s former CEO tried to reorient the business toward NFTs but was met with pushback from board members and investors.
In the meantime, True USD, which has a banking relationship with Prime Trust, has halted stablecoin minting and redemptions due to Prime Trust’s bandwidth concerns. Furthermore, the South Korean crypto yield farm Haru Invest has ceased operations. They are claiming difficulties with an unknown service provider. People believe this is either Banq or Prime Trust.
The bankruptcy filing of Banq adds to Prime Trust’s challenges and ongoing efforts to stabilize its financial status. As the case advances, a judge has ordered the parties to arbitrate, citing arbitration terms signed by Scott Purcell and the other defendants. The result of this bankruptcy and the solution of internal issues will have a substantial impact on Banq and its parent company’s future.