Quick Breakdown
- Fortress Trust ordered to cease operations after Nevada regulators identified major asset-liability gaps.
- Echoes of Prime Trust’s collapse, which cost users over $80 million.
- Increased federal and state scrutiny signals tougher compliance demands for crypto custodians nationwide.
Nevada orders Fortress Trust to halt operations
U.S. regulators are ramping up scrutiny of digital asset custodians, with Nevada’s Financial Institutions Division (FID) ordering Fortress Trust to cease operations after uncovering signs of insolvency and poor financial management.
Nevada just ordered #FortressTrust to halt operations over solvency risks.. regulators found a big mismatch between assets & liabilities
This comes from the same founder behind Prime Trust’s collapse back in 2023
Shows how tight the rules on crypto custodians are getting lately
— CryptoNinja (@CryptoNinjaPro) October 24, 2025
According to an October 24 Bloomberg Law report, the FID issued a cease-and-desist order following the discovery of a “significant mismatch between assets and liabilities.” The ruling bars the company from taking new deposits or transferring existing assets, effectively freezing its operations.
Fortress Trust, founded by Scott Purcell, former CEO of the defunct Prime Trust had served more than 250,000 clients. The firm previously attracted attention from Ripple, which considered acquiring it before a $15 million security breach in 2023 derailed the deal.
Echoes of Prime Trust collapse
The latest enforcement action mirrors Nevada’s earlier intervention against Prime Trust, which lost control of over $80 million in customer assets before being placed into receivership. Fortress Trust had emerged from that incident as a “safer alternative,” but regulators now allege it suffers from similar weaknesses in asset management and financial transparency.
Crypto custodians face rising federal and state scrutiny
Fortress Trust’s downfall comes amid a broader tightening of oversight across the U.S. crypto custody landscape. On September 30, the Securities and Exchange Commission (SEC) and New York’s Department of Financial Services (NYDFS) issued new guidance requiring custodians to improve insolvency protections and disclose smart contract-related risks.
These updated rules are expected to pressure smaller firms unable to meet compliance and reporting standards, potentially driving consolidation within the sector.
In April, the SEC hosted a roundtable highlighting persistent risks in crypto custody, including reliance on untested smart contracts and inadequate infrastructure for safeguarding customer funds. Regulators also debated introducing new frameworks for “special purpose” crypto broker-dealers.
Nevada expands enforcement to digital asset services
Nevada’s crackdown extends beyond custodians. Earlier this month, a federal court upheld a cease-and-desist order blocking Crypto.com from offering event-based betting products in the state. This ruling further illustrates regulators’ commitment to curbing risky or unauthorized digital asset activities.
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