Crypto custodian Prime Trust has been ordered by the Eighth Judicial District Court of Nevada, where the company has its headquarters, to be put into receivership after the state ordered the company to cease all activities amid a shortfall in customer funds and accusations that it used customer funds to meet withdrawal requests.

According to the filing with Nevada’s Department of Business and Industry Financial Institutions Division, Prime Trust’s overall financial condition has been “considerably deteriorated to a critically deficient level” which leaves the company in an “unsafe or unsound condition to transact business.”

The company’s operations will be taken over by John Guedry, former president of Bank of Nevada, the filing stated.

The Nevada regulator announced in June that it had filed to take over the company and freeze all of its businesses after it alleged Prime Trust of near insolvency. The order came hours after fellow crypto custodian BitGo terminated its acquisition of the company.

The request for receivership stated that Prime Trust owed its clients north of $85 million in fiat, and only had about $3 million in fiat currency on hand. The company owed a further $69.5 million in crypto to customers, and had $68.6 million in crypto on hand, the filing said.

The filing also accused Prime Trust of using money from its customer accounts to satisfy requests for withdrawals from its “legacy wallets.”

CORRECTION (July 20, 2023, 19:27 UTC): Corrects that John Guedry is the former president of Bank of Nevada.