Prime Trust Can’t Access $45 Million in Legacy Wallet: Arkham

The Prime Trust team reportedly reintroduced the legacy wallet for customer use in January 2021, only to realize it was inaccessible nearly 12 months later.

Blockchain analytics firm Arkham identified a wallet that holds more than $45 million worth of crypto that belongs to the beleaguered crypto custody firm Prime Trust.

We believe a wallet with a token portfolio worth over $45M (95% ETH) is a Prime Trust legacy wallet and is currently inaccessible to their team – matching yesterday’s court filing.

0xf4E11b89519EcCd988A56749f1C64aD9bFe0298f pic.twitter.com/81sazDl5Gl

— Arkham (@ArkhamIntel) June 28, 2023

The wallet in question holds around 23,800 ETH, valued at over $44 million at current prices, along with $935,000 worth of USDC, and small amounts of USDS, HEX and HSF. 

According to Arkham’s CEO Miguel Morel, the Prime Trust team likely lost the private keys to the wallet, rendering the crypto held in it inaccessible for good.

Based on the most recent outflow of $527,000 TUSD from the legacy wallet to another Prime Trust Custody wallet, the firm likely lost access to the wallet around January 2020. This coincides with the timeline of when Prime Trust migrated their wallets and came under new management, according to a court filing from the Nevada financial regulator’s Financial Institutions Division (FID).

The filing reveals that after Prime Trust entered an agreement with Fireblocks, the new management reintroduced specific legacy wallet forwarding of customer assets in January 2021 after encountering trouble with creating new wallets on the Fireblocks platform.

“However, it is understood that on or about December 2021, PRIME discovered that it was unable to access the Legacy Wallets and the cryptocurrency therein,” stated the filing.

Last week, the FID issued Prime Trust a cease-and-desist order and alleged that the firm was effectively insolvent and would be unable to meet customer withdrawals. On Tuesday, the regulator requested to place Prime Trust into receivership, stating that it owes its clients $85 million in fiat currency but has just $3 million in fiat on hand.