Prime Trust’s Bankruptcy Exposes $8 Million Loss from TerraUSD Crash
In Brief
A recent bankruptcy filing by Prime Core Technologies, the parent company of crypto custodian Prime Trust, exposed an $8 million loss resulting from investments in TerraUSD.
The bankruptcy filing also revealed how Prime Trust’s financial troubles were exacerbated by spending practices and an unrelated wallet loss.
A recent bankruptcy filing by Prime Core Technologies, the parent company of crypto custodian Prime Trust, exposed an $8 million loss resulting from investments in TerraUSD. The loss, stemming from the collapse of the algorithmic stablecoin TerraUSD in May 2022, encompassed $6 million in client funds and $2 million in Treasury funds.
TerraUSD’s collapse stands out as a pivotal event contributing to a substantial crypto market downturn in 2022, impacting not only Prime Trust but other entities like FTX, BlockFi, Celsius Network, and Voyager Digital that either faced collapses or filed for bankruptcy.
The fallout from TerraUSD dealt a significant blow to Prime Trust‘s finances, becoming a key factor in its declaration of bankruptcy in the United States.
Facing potential liabilities ranging from $100 million to $500 million and dealing with 25,000 to 50,000 creditors, Prime Trust pursued financial protection following a court-appointed receiver in Nevada. This move aimed to prevent potential harm to users and the broader cryptocurrency market.
The bankruptcy filing also revealed how Prime Trust’s financial troubles were exacerbated by spending practices and an unrelated wallet loss. Specifically, Prime Trust disclosed its acquisition of Ethereum (ETH) valued at $76.4 million to fulfill customer withdrawal requests after being unable to access specific funds.
Prime Trust’s declaration of bankruptcy has illuminated a complex web of financial missteps, including substantial losses from TerraUSD investments, excessive expenditures, and an unrelated wallet incident. The company’s downfall, marked by an $82.8 million deficit in fiat currencies and $861,000 in cryptocurrencies, stands as a cautionary tale for the industry.
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About The Author
Valeria is a reporter for Metaverse Post. She focuses on fundraises, AI, metaverse, digital fashion, NFTs, and everything web3-related. Valeria has a Master’s degree in Public Communications and is getting her second Major in International Business Management. She dedicates her free time to photography and fashion styling. At the age of 13, Valeria created her first fashion-focused blog, which developed her passion for journalism and style. She is based in northern Italy and often works remotely from different European cities. You can contact her at [email protected]
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Valeria is a reporter for Metaverse Post. She focuses on fundraises, AI, metaverse, digital fashion, NFTs, and everything web3-related. Valeria has a Master’s degree in Public Communications and is getting her second Major in International Business Management. She dedicates her free time to photography and fashion styling. At the age of 13, Valeria created her first fashion-focused blog, which developed her passion for journalism and style. She is based in northern Italy and often works remotely from different European cities. You can contact her at [email protected]
