Banq, a unit of Prime Trust, files for bankruptcy.

Banq, a company owned by troubled cryptocurrency custodian Prime Trust, has filed for bankruptcy in a U.S. bankruptcy court in Nevada.

In the bankruptcy filing, the company reported $17.72 million in assets and $5.4 million in liabilities.

This happened as Prime Trust, Banq’s parent company, attempted to close a deal to acquire BitGo after facing financial difficulties following the Celsius bankruptcy.

Meanwhile, TrueUSD, which has a banking relationship with Prime Trust, said that its pause in stablecoin mints and redemptions is due to “Prime Trust’s bandwidth issues.”

Haru Invest, a South Korean cryptocurrency yield company, also experienced an operational pause due to difficulties with an unnamed service provider, which is believed to be Banq or Prime Trust.

Banq’s Internal Issues

The company also stated in its filing that $17.5 million of its assets were subject to an “unauthorized transfer” by former officers, consisting of trade secrets, proprietary information and technology, to Fortress NFT Group.

Fortress NFT Group was founded by Banq’s former CEO, CTO, and CPO. Banq has sued Fortress for allegedly stealing trade secret information to launch rival NFT platforms Fortress NFT and Planet NFT. It further alleges they engaged in fraudulent activities to cover up their misconduct.

Banq said in a lawsuit against the trio that Scott Purcell, its former CEO, attempted to pivot Banq towards NFTs. Facing opposition from its board and shareholders, Purcell founded Fortress NFT and then sold Banq’s computers, intellectual property, and corporate infrastructure to the new company.

“Their theft of Banq’s corporate assets even included taking the company’s seat licenses for Las Vegas Raiders’ games at Allegiant Stadium, all without Board approval or knowledge. Specifically, Defendant Purcell transferred the seat licenses owned by Banq to himself,” the lawsuit reads.

In early 2023, a judge ordered the case to go to arbitration as Purcell and the other defendants signed arbitration clauses.

Edited by Parikshit Mishra.