The popular crypto custody platform in Palo Alto BitGo, plans to acquire Prime Trust at an undisclosed price. A source privy to the matter revealed that the BitGo team has been seeking to close the Prime Trust acquisition deal.
A person familiar with the matter stated that BitGo’s negotiation to acquire Prime Trust had reached its preliminary stage. At this stage, BitGo must seek regulatory approval to acquire the troubled crypto custodial firm.
BitGo Plans to Acquire Prime Trust
Recently the Prime Trust has been the center of the discussion following a debate on the company’s financial health. The community argued that Prime Trust was at the edge of liquidation.
A blog post shared by BitGo revealed that the firm had signed a term sheet for acquiring Prime Trust. In support of this, the chief executive of BitGo, Mike Belshe, confirmed that the decision to acquire Prime Trust would support the firm in providing innovative solutions.
Belshe expressed delight that the acquisition would support BitGo in broadening its geographic presence and attracting a large clientele.
Elsewhere Jor Law, the chief executive of Prime Trust, argued that BitGo’s acquisition was an important milestone for the growth of the crypto sector. Law is opportunistic that the collaboration between BitGo and Prime Trust would lead to the development of revolutionary products and services.
Based on Law analysis, the collaboration will strengthen the existing workforce in terms of knowledge sharing and expertise. He added that the crypto custodial company would provide world-class products transforming the crypto sector.
Factors Contributing to Growth of Crypto Custodial Sector
Initially, the Prime Trust team provided essential services in storing cryptos to institutional and retail investors. The Prime team has strived to provide exceptional custodial services, cemented that firm at a considerable value.
In 2022 the Prime team generated $107 million in a series B funding round led by FIS, Kraken Ventures, and Mercato Partners. At that time, the company withheld information about its valuation.
However, it was reported that the investment was invested in expanding Prime’s wealth management products. The Prime team confirmed that the $ 107 million would be utilized in developing Web3 and decentralized finance (DeFi) products.
After Prime’s successful funding round, the bears invaded the crypto market, causing the prices of digital assets to establish a dribbling momentum. The uncertainty in the market triggered by the prolonged crypto winter has limited the growth of Prime Trust.
Earlier in January, Prime Trust reduced its workforce by a third to remain operational. Days after dismissing the Prime core team, the company revealed plans to wind down operations in Texas and abandon the ongoing registration processes to acquire a money transmitter license.
The crypto custodial sector has recently experienced modest changes due to technological development and innovation. The growth in the custodial sector has challenged the United States Securities and Exchange Commission (SEC) to push for the drafting of new rules.