The Filing of a Prime Trust Reveals a Chain of Failures That Led to the Filing of a Bankruptcy

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Last Updated on August 28, 2023 by Bitfinsider

Prime Trust CEO Jor Law outlined how the firm was pounded by a combination of the plummeting cryptocurrency market and a management team that refused to shift course throughout the plunge in a petition with the United States Bankruptcy Court in Delaware on Thursday. Instead, Law, who took over as interim CEO in November, claimed the company’s prior leaders increased expenditure at a time when revenues were strained.

According to Law, Prime Trust spent around $10.5 million in October against revenues of approximately $3.1 million, resulting in a net loss of almost $7 million. A month later, spending increased to $11.1 million, resulting in another net loss of around $8.4 million.

The collapse of TerraLUNA in May, following the failure of Terra’s UST stablecoin and LUNA governance token, was one of the events that directly impacted the company last year. Law stated that before Terra fell, Prime Trust invested $6 million in customer cash and $2 million from its own treasury.

Another severe event saw the corporation locking itself out of its own cryptocurrency wallet.

Low highlighted, under the subheading “The Wallet Event,” how corporate officials used a “cold storage wallet” to keep onto tokens such as ETH and ERC-20 compliant coins. One wallet, dubbed the “98f Wallet,” was established in March 2018 as a gadget that required both physical possession and several signatures to access.

Prime Trust transferred its wallets to a system run by digital security company Fireblocks in 2019. However, the company was unaware that the transition from traditional wallets to the new system was incomplete, nor that it was still supplying consumers with addresses that allowed them to deposit funds into the 98f wallet.

It only discovered these errors after an anonymous customer sought a significant ETH withdrawal that the company was unable to complete. To make matters worse, it quickly discovered that it no longer possessed the physical devices—engraved Cryptosteel plates—required to even access the old wallet.

Law stated that Prime Trust still does not have access to the 98f wallet.

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