Digital asset custodian BitGo has shelved its planned acquisition of rival Prime Trust despite preliminary agreement reached earlier in the month. The initial takeover agreement came amid speculation that Prime Trust was facing bankruptcy.

BitGo Shuns Prime Trust Takeover

“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,” the California-based firm said in a Twitter post published today (Thursday). “This decision was not made lightly and BitGo remains committed to our mission to deliver trust in digital assets.”

The speculation about Prime Trust’s health was fueled by recent developments at the Nevada-based firm. In January, the firm quit service provision in Texas after previously withdrawing its Texas Money Transmitter License (MTL) application. In the same month, the crypto custodian shredded one-third of its workforce, mostly staff members in the communications and compliance departments, according to CoinDesk.

Last week, Banq, a mobile software solutions provider and subsidiary of Prime Trust, filed for bankruptcy in a US court in Nevada, declaring $17.72 million in assets and $5.4 million in liabilities. Prime Trust itself was initially primed for a $1.2 billion acquisition by Galaxy Digital by late 2021. However, the deal fell apart in August last year, with Prime Trust’s claim of $100 million in damages later dismissed by a court in Delaware.

Prime Trust Stops Deposit

Meanwhile, Prime Trust has ceased all deposits of fiat and crypto assets for custody, according to Stably, which is a company that provides stablecoins and fiat-to-crypto on-ramps. The move is in line with an order by the Nevada Financial Institution Division.

Cryptocurrency exchange Coinmetro also made a similar move, saying it “is currently unable to process new USD transactions."