The recent cease-and-desist order for PrimeTrust by the Nevada Department of Business and Industry - Financial Institutions Division (NFID) has caused some level of concern in the industry. According to the order, PrimeTrust's financial position had deteriorated, making it unable to fulfill withdrawal requests due to a shortage of customer funds. This left customers who had entrusted their assets to PrimeTrust in a difficult position, unable to access their funds.
It's unfortunate to hear that PrimeTrust failed to fulfill its fiduciary responsibilities. However, the regulatory system worked as intended. In the enforcement order, PrimeTrust's negative stockholder equity position was noted in regulatory reporting, and the NFID business review was expanded. This demonstrates that the oversight system was operating as it should, although it can be asked why actions weren't taken sooner to prevent the situation from escalating.
If PrimeTrust's customers had access to on-chain balances or the ability to move their digital assets to a different custodian, they may have been able to protect themselves sooner. Choosing a regulated and trustworthy institution to buy, sell, and hold crypto assets is a crucial step in ensuring the safety of credit union members. Additionally, at CryptoFi, we prioritize safety and compliance by partnering with qualified custodians that are regulated and insured. We also add an additional layer of on-chain auditing through our Proof of Reserves system. This provides the highest level of protection for both our credit unions' and their members' assets. We strive to lead the way in offering secure and reliable crypto services for our clients.
CryptoFi’s Position/Benefits
CryptoFi firmly believes that the safest and most secure way to buy, sell, and hold crypto assets is through a highly regulated and trustworthy financial institution, such as a bank or credit union. To ensure the safety and protection of institutional and consumer assets, CryptoFi partners with regulated and audite\]d custodians that are fully insured.
To further safeguard our consumers and partners, we do not offer yield products that may be considered securities by the SEC, nor do we offer any coins that could be deemed as such. Instead, we encourage our partners to offer Bitcoin (BTC) and other non-security coins, such as Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH), and Stellar (XLM). These coins were not included in the SEC's recent filing against Coinbase.
How We’re Different from Exchanges
From the beginning, we intentionally built CryptoFi’s solutions to fully address regulatory concerns. CryptoFi’s cryptocurrency management platform is purpose-built to safely serve banks and credit unions, regardless of events in the market.
CryptoFi's commitment to safety and compliance has been a cornerstone of our market offerings from the outset. We firmly believe that regulated financial institutions, such as banks and credit unions, provide the safest and most secure environment for consumers to manage their cryptocurrency investments. Our systems are designed to deliver a wide range of crypto services that prioritize opportunity, safety, and compliance.
As the events surrounding PrimeTrust have shown, financial institutions must be prepared to offer digital asset offerings in a safe and secure manner. Consumers deserve a reliable and secure place to invest their assets, and CryptoFi is here to help institutions capitalize on the future that crypto offers within regulated financial walls. By offering cryptocurrency services within regulated financial institutions, we can de-risk and protect members' and customers' assets.
We are dedicated to serving our current and future clients, and we encourage them to reach out to us directly if they have any questions.
Kian Sarreshteh
CEO, CryptoFi