Nevada’s Financial Institutions Division moved to place Prime Trust into receivership, a designation of insolvency.

The crypto company sought receivership from the state’s enforcement agency after it received a cease-and-desist order from the regulator on June 21.

In a Tuesday court filing, the state agency asked the court to impound the assets and related property of Prime Trust immediately. It also moved to enjoin Prime’s employees from removing Prime property without the permission of the court-mandated receiver.

Prime Trust, per the Monday filing, was only $861,000 short of paying back its outstanding crypto-based obligations to clients. But the company’s outstanding fiat obligations were said to be far steeper: $85,670,000 owed — with just $2,904,000 of fiat reserves on its balance sheet.

The latter discrepancy, per the filing, amounts to an $82,766,000 hole.

Prime Trust allegedly “[purchased] additional digital currency using customer money from its omnibus accounts” from December 2021 to March 2022 after Prime “discovered that it was unable to access the Legacy Wallets and the cryptocurrency within.”

Prime Trust received the cease-and-desist after BitGo confirmed that it was backing out of its signed letter of intent to acquire the business.

“The overall financial condition of Respondent has considerably deteriorated to a critically deficient level, and Respondent is now in a position where it is in an unsafe or unsound condition to transact business and/or if it were to continue to operate it would be in an unviable and/or unsafe manner,” the FID said in its June 21 filing.

The cease-and-desist confirmed that the company, on the same day the filing was made public, was unable to “honor customer withdrawals due to a shortfall of customer funds caused by a significant liability on the Respondent’s balance sheet owed to customers.”

After considerable effort and work to find a path forward with Prime Trust, BitGo has made the hard decision to terminate its acquisition of Prime Trust. This decision was not made lightly and BitGo remains committed to our mission to deliver trust in digital assets. — BitGo (@BitGo) June 22, 2023

BitGo and Prime Trist had originally announced the letter of intent after Blockworks reported that Prime Trust was looking to raise $25 million in a weekend.

Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.