Crypto titans Caitlin Long and Mike Belshe debate client protection

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On June 21, crypto custodian Prime Trust was served a cease and desist by Nevada’s Financial Institutions Division, which claimed the company had a shortage of assets to cover customer debts. A few days later, on June 26, Nevada took over Prime Trust, placing the company in receivership.

It joins a growing list of failing crypto entities that have ensnared customer funds, along with Celsius, BlockFi, Voyager Digital and others.

According to Nevada’s receivership application, Prime Trust had discovered in December 2021 that it was unable to access some of the wallets containing its clients’ crypto. The company then, allegedly until March 2022, purchased additional crypto using customer money to cover the shortfall. Although the company has managed to raise over $100 million by June 2022, it currently only has $2,904,000 in fiat currency, but owes over $85 million to its clients.

BitGo, led by co-founder and CEO Mike Belshe, called off a planned acquisition after details of Prime Trusts’ financial condition were uncovered. While Prime Trust is in receivership, it is unclear who will bear the brunt of the $80 million shortfall.

Hence the heart of the debate. Who should plug the hole when crypto custodians fail? And how can we best protect customer funds in the first place?

It’s Caitlin Long vs. Mike Belshe in Coinage’s Inaugural Crypto Showdown Debate!

Caitlin Long, Founder and CEO of Custodia Bank, ranks as one of the most influential voices for digital asset security in the crypto space. Custodia Bank is registered in Wyoming as a Special Purpose Depository Institution (SPDI, pronounced Speedy, according to professionals), intended to provide crypto custodians with broad protection against mismanagement of customer assets, bad loans and external threats.

According to Long, in a Twitter thread about the situation, the Prime Trusts receivership fees the company has already agreed to pay will likely be borne by its clients as Nevada moves to protect its taxpayers’ funds. . Long also thinks Wyoming’s SPDI law would have better protected customer assets in this case.

Belshe responded with his own thread, saying he supports the Wyoming law, but that it wouldn’t have changed Prime Trust’s situation or any other notable meltdown in the crypto space if it had applied to the business. Belshe sees no situation in which taxpayers would cover a company losing funds the way Prime Trust did, likening it to a valet stealing an expensive car: All that Wyoming bonding won’t replace your Bugatti.

So, who is right ? Were counting on your help to decide. The debate will be public on Twitter Spaces, today at 5 p.m. ET, but if you have a Coinage NFT, you can vote for who you think is the winner. Don’t worry about voting too early, you can change your mind as many times as you want before voting closes.

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