Prime Trust Partner Banq Files For Bankruptcy Following BitGo Acquisition Deal

Banq—a Nevada-based crypto funds and financial savings platform—filed for Chapter 11 chapter safety on Tuesday, based on courtroom paperwork. 

The submitting arrives days after crypto custodian BitGo signed a letter of intent to accumulate Banq’s mum or dad firm, Prime Belief, amid swirling rumors that the latter agency was going through insolvency. 

In its written reorganization plan, attorneys representing Banq claimed that Banq’s troubles started again in 2021 due to mismanagement underneath former CEO Scott Purcell. 

After Purcell resigned alongside two different executives late that yr, the corporate’s board of administrators found that Purcell and the others had secretly transferred giant quantities of firm information and property to their newly based firm, Fortress NFT Group. This included “the overwhelming majority of [Banq] staff, commerce secrets and techniques, mental property, expertise, enterprise alternatives, and gear.”

Banq later confronted authorized challenges from N9 Advisors associated to a $3 million unsecured promissory observe that Purcell offered to N9 in July 2021. Attorneys imagine N9 is a “substantial investor in Fortress.”

“On account of the Purcell defendants’ misappropriation of the debtor’s property and the bills related to defending towards the claims of N9 Advisors within the Florida Motion, the debtor was left with inadequate sources to renew its enterprise operations,” wrote attorneys. 

In different chapter paperwork, Banq listed $17.72 million in property and $5.4 million of liabilities. 

Scott Purcell can also be a former CEO of Banq mum or dad Prime Belief, and affiliated firms—together with Binance.US, Abra, and Swan—confronted withdrawal delays final week. Redemptions on TrueUSD stablecoins via the custodian had been equally pressured to a halt. 

Swan confirmed late final month that it had transferred all shopper property to each BitGo Belief and Fortress Belief. Later, Strike CEO Jack Mallers—who beforehand touted Prime Belief as a companion—introduced final week that Strike had moved its infrastructure in-house to offer custody for patrons’ Bitcoin and USD. 

The BitGo CEO defined throughout a Twitter Areas final Friday that his firm possible wouldn’t have gone ahead with an acquisition deal if Prime Belief was financially wholesome. 

“They mainly spent an excessive amount of cash,” he mentioned, including that the corporate’s ”month-to-month burn going via final summer season was simply rubbish.”