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Coinbase Intervenes in Prime Trust Bankruptcy to Protect Customer Assets

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by Giorgi Kostiuk

a year ago

Coinbase has taken steps to protect customer assets in the bankruptcy case of crypto custodian Prime Trust.

Prime Trust Bankruptcy Situation

Prime Trust, a crypto custodian, filed for bankruptcy on August 14, 2023, citing a sharp decline in customer deposits, revealing an $82 million deficit. The company's main issues are related to asset management and a significant amount of illiquid tokens.

Coinbase's Role in Protecting Clients

Coinbase, led by chief legal officer Paul Grewal, has filed a brief to ensure legal protection of client assets with custodians, based on Article 8 of the Uniform Commercial Code (UCC).

Importance of UCC Article 8

Article 8 of the UCC protects customer assets, whether they are in digital or traditional financial institutions, from unfair absorption during bankruptcy proceedings. This is a significant issue that affects custodial services in both the crypto and traditional finance sectors.

Coinbase's intervention in the Prime Trust bankruptcy case aims to set a precedent for protecting client assets amidst financial challenges faced by companies.

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