Report: Nevada Regulators Freeze Crypto Custodian's Activities After Discovering $11M Shortfall

Nevada’s Financial Institutions Division dropped the hammer on Fortress Trust, the crypto custodian based in the Silver State, after discovering an $11 million hole in client funds, according to a regulatory enforcement filing unearthed by DL News.

Fortress Trust Meltdown: Regulators Step In as Firm Admits Insolvency

A few years ago in 2023, Bitcoin.com News reported on the downfall of Prime Trust after reportedly losing access to a wallet holding customer funds. The company’s founder and former CEO launched Fortress Trust, which was later rebranded to Elemental Financial Technologies.

A filing first discovered and published by DL News and authored by Nevada’s Financial Institutions Division (FID) shows the firm was quietly ordered to “cease and desist from any and all activities.” The document states that “on or about Oct. 7, 2025,” a company representative admitted it was teetering on insolvency and unable to “continue operations and meet customer withdrawals.”

The FID filing lays bare Fortress’s balance sheet, revealing that the company’s total client liabilities outweighed its reserves — a clear sign its assets couldn’t keep pace with what it owed. The FID cease and desist filing notes that the firm’s “liquidity position is wholly inadequate to meet customer obligations” and it was unable to provide regulators with “complete financial records.”

The state regulators add that Fortress’s shaky financial position demanded swift intervention to safeguard client assets and preserve financial integrity. “The overall financial condition of [the] respondent has considerably deteriorated to a critically deficient level, and [the] respondent is now in a position where it is in an unsafe or unsound condition to transact business and/or if it were to continue to operate it would be in an unauthorized and/or unsafe manner.”

At this point, Fortress’s fate looks sealed. With regulators stepping in, reserves depleted, and operations frozen, it’s hard to imagine any comeback story here. Meanwhile, Fortress’s customers or liabilities are not disclosed in the regulatory filing. The official Fortress Trust X account has not posted since July.

FAQ 🧠

• **What happened to Fortress Trust?**Nevada regulators ordered Fortress Trust to cease all operations after uncovering an $11 million shortfall in client funds.
• **Who oversees Fortress Trust?**The Nevada Financial Institutions Division (FID) regulates the firm and issued the cease-and-desist order.
• **How is Prime Trust connected to this?**Fortress Trust was founded by the former CEO of Prime Trust, another Nevada-based custodian that collapsed in 2023.
• **What’s next for Fortress Trust customers?**Clients are waiting on guidance from state regulators as the firm’s assets and obligations are reviewed.