Prime Trust lost $8M after Terra collapsed; bought $76M ETH in unrelated wallet loss News ▸ US ▸ Bankruptcy
Prime Trust lost $8M after Terra collapsed; bought $76M ETH in unrelated wallet loss
The company revealed the numbers in a new bankruptcy filing.
2 min read
Updated: Aug. 25, 2023 at 1:12 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Failed crypto custodian Prime Trust revealed new details about its past financial shortfalls in a filing submitted to bankruptcy courts on Aug. 24.
That filing indicates that Prime Trust’s investment in the TerraUSD (USTC) stablecoin resulted in millions of dollars of losses for the company. Specifically, the company’s investment in the now-failed stablecoin led to the loss of $6 million of client funds and $2 million of treasury funds, amounting to a total loss of $8 million.
The filing also notes that the “crypto winter” of summer 2022, which occurred around the time of Terra’s collapse and led to industry-wide liquidity losses, resulted in reduced revenues. Prime Trust continued to spend money despite declining revenue: in October 2022, the company’s spending resulted in net losses of $7.4 million, and in November 2022, its spending resulted in net losses of $8.4 million.
Prime Trust additionally said that it purchased $76.4 million worth of Ethereum (ETH) in order to cover customer withdrawal requests after it lost access to certain funds.
That issue occurred after Prime Trust moved its crypto to the storage service Fireblocks in July 2019. After migrating addresses, Prime Trust accidentally instructed users to send funds to a crypto address no longer in use, leaving the firm unable to access those funds. Prime Trust had to purchase new cryptocurrency to cover user withdrawals.
Prime Trust also attempted to raise funds but was unable to become profitable again.
Prime Trust’s wind-down began months ago
Prime Trust began to halt its operations earlier this summer. Nevada regulators asked for the firm to be placed in receivership on June 27. Courts later ordered the firm into receivership on July 18. Prime Trust filed for bankruptcy on Aug. 14.
In its current filing, Prime Trust said that it had $82.8 million in fiat deficits and $861,000 in cryptocurrency deficits at the time of its failure, in line with previous reports.
Though the broader details of Prime Trust’s failure were publicized in June, the latest filing provides more detailed information about the amount at play.
Mentioned in this article
Posted In: US, Bankruptcy
Author 
Mike Dalton
Before transitioning to crypto writing in 2018, Mike studied library and information sciences. Currently, he resides on Canada's West Coast.
Latest US Stories
Featured Story
Advertise Here
In this article
TerraUSD (UST) is a decentralized and algorithmic stablecoin on the Terra blockchain.
Ethereum
$3,385.65
Ethereum is a decentralized, open-source blockchain platform that enables the creation of smart contracts and decentralized applications (DApps).
