TrueCoin was a cryptocurrency platform enabling trust companies and banks to issue certain fiat-backed stablecoins, including TrueAUD (“TAUD”), TrueGBP (“TGBP”), TrueHKD (“THKD”), and TrueCAD (“TCAD”)(collectively, the “TrueCurrencies”). Prime Trust was TrueCoin’s primary trust company that held and managed the fiat currency backing TrueCoin’s TrueCurrencies.
On August 18, 2023, the Prime Trust bankruptcy case was initiated in the Delaware Bankruptcy Court before Judge Kate Stickles. Thereafter, TrustToken and TrueCoin (collectively, “TrueCoin”) filed proofs of claim setting forth the amounts of their customers’ foreign currency held in Prime Trust accounts.
On November 13, 2023, Prime Trust filed a motion in the Bankruptcy Court seeking authority to sell TrueCoin’s foreign currency held by Prime. Prime Trust argued that the foreign currency was property of the bankruptcy estate because it was deposited in commingled corporate bank accounts held in Prime Trust’s name. On November 27, 2023, TrueCoin opposed the motion, explaining that Prime Trust misrepresented the relationship between the parties and the foreign currencies were deposited in escrow accounts, and the funds were held for the benefit of TrueCoins token holders. Following briefing, in December 2023 TrueCoin and the Plan Administrator agreed to adjourn a final decision on the foreign currency motion in order to provide the parties the opportunity to confer and negotiate a potential settlement. Following this adjournment, the parties have conferred but have not yet engaged in substantive settlement discussions regarding the foreign currency. The Plan Administrator has not initiated any further proceedings with respect to the foreign currency.
On January 15, 2025, the Plan Administrator filed a motion for entry of an order approving the Plan Administrator’s determination that the Debtors’ assets are property of the bankruptcy estate. This motion related specifically to cryptocurrency and United States Dollars, carving out foreign currency that was the subject of the November 2023 motion. The Plan Administrator raised many of the same arguments raised in the November 2023 motion, including that the assets were deposited into commingled accounts that Prime Trust oversaw with unique control, as opposed to a more limited trust capacity. Although TrueCoin’s claims were specifically carved out of the January 2025 motion, TrueCoin filed a limited objection and reservation of rights to confirm that its claims were not implicated by the motion. In its reply brief, the Plan Administrator confirmed that TrueCoin’s claims are carved out and not subject to the January 2025 motion.
The Court held a hearing on the January 2025 motion related to cryptocurrency and USD on February 14, 2025, which was continued to February 21, 2025. The Court will issue a ruling on the January 2025 motion in the near term, but any such ruling will not be binding upon the foreign currency held by Prime Trust in TrueCoin’s accounts. Nevertheless, because of the similarity of issues involved in both motions, we are monitoring the outcome of the USD/cryptocurrency motion.
If you are a TrueCurrency holder and have questions related to this process, please feel free to contact us at: legal@truecoin.com
