Crypto Custodian BitGo to Acquire Rival Prime Trust for Global Expansion
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The US-based crypto custodian firm BitGo has signed a letter of intent to acquire Prime Trust, another US-based rival firm.
BitGo announced that the acquisition of Prime Trust would make it the first digital asset provider to offer a complete set of solutions for fintech platforms and institutions globally.
BitGo Signs Letter of Intent to Buy Prime Trust Crypto Firm
On Tuesday, the California-based crypto custodian firm BitGo Holdings Inc. announced on Twitter that it had signed a non-binding term sheet to acquire Prime Trust crypto custody firm.
BitGo did not reveal how much it is bidding for Prime Trust firm, but it did state that the acquisition is intended to provide Prime Trust clients with long-term stability and secure solutions.
BitGo signed a term sheet to acquire the equity of Prime Core Technologies, Inc., the parent company of Prime Trust, bringing business continuity, long-term stability and regulated, secure solutions to valued Prime Trust clients.
This acquisition makes BitGo the first global… pic.twitter.com/CUcTUeCFKu
— BitGo (@BitGo) June 8, 2023
The crypto custodian firm also published a press release on its website with more details on the Prime Trust acquisition deal.
In the press release, Jor Law, President and Interim CEO of Prime Trust emphasized that the collaboration between the firms will be a massive enhancement for the crypto industry.
Law emphasized that the combined company would possess unmatched experience and a wide range of products and services in the industry.
The press release on the acquisition also included a comment by Mike Belshe, the co-founder and CEO of BitGo.
In his comment, Mike Belshe described the acquisition as a “landmark transaction” that is shaping the landscape of digital assets to better align with a sustainable future.
Belshe also revealed that BitGo expects the acquisition of Prime Trust to further position the company as a provider of best-in-class and trusted solutions.
The Not-So-Great Q1 for Prime Trust and Recent Speculations of Bankruptcy
In the first quarter of 2023, the crypto services company Prime Trust experienced some difficulties.
Toward the end of January, the company ceased operations in Texas, where it had initially applied for a money transmitter license.
In a now-deleted article, Prime Trust notified its affected customers about withdrawing its application for a Texas Money Transmitter License (MTL).
The company mentioned that Texas-based users could no longer open new accounts with Prime Trust. Additionally, contributions to the accounts of existing users based in Texas are currently blocked.
Just a week after ceasing operations in Texas, Prime Trust firm laid off one-third of its staff to cut costs.
Press reports claimed that the massive lay-off mostly affected staff working at the communications and compliance departments of Prime Trust.
At the time of the lay-off, Prime Trust withheld information about the number of staff affected by the sudden cut.
But now, in June 2023, there has been online speculation about Prime Trust facing bankruptcy before the recent news of BitGo acquiring the company.
On June 8, 2023, an activist and Twitter influencer, ODELL, made a Tweet claiming that Prime Trust is among the top 3 “crypto bank runs” happening at that moment.
A few hours after the Tweet, BitGo published the official announcement that it had signed a letter of intent to acquire Prime Trust company.
Meanwhile, ODELL’s tweet implied that Prime Trust, alongside Coinbase and Binance exchanges, are three crypto services companies facing a crisis.
One of the themes of this #crypto bear 🐻market is consolidation.
Latest is @BitGo acquiring @PrimeTrustCo.
With revenues and demand down, larger firms are using lower market valuations to add to their client base and maximise their economies of scale. https://t.co/YDIA0ZxR6k
— Duncan Trenholme (@DuncanTrenholme) June 9, 2023
He insisted that the low revenues and demand recorded by small firms like Prime Trust lowered their market valuation, creating room for acquisition by a bigger firm like BitGo.
