Prime Trust Loses $8M As a Result of Investment in Terra Stablecoin
Jor Law, the head of platform crypto custodian Prime Trust, has revealed during the company’s bankruptcy proceedings on November 29, 2022 that the former management had mismanaged the company.
For example, in January 2021, customers were asked to transfer money to an inaccessible wallet, which led to the company spending $76 million on ETH to fund withdrawal requests.
Later that year, Prime Trust had revenue of only $2.7 million, yet spent $11.1 million. To cover these costs, the firm had to use not only customer money ($6 million) but also funds from its own treasury ($2 million) to invest in the collapsed algorithmic stablecoin TerraUSD (UST).
In June of the same year, the Nevada Department of Business and Industry ordered Prime Trust to freeze deposits and withdrawals due to a “capital shortfall” that hindered the firm’s ability to meet customer withdrawals.
Prime Trust is now facing a debt of almost $1 million in cryptocurrencies and $83 million in fiat. This situation is further compounded by the insolvency of associated company Banq.
