- Prime Trust’s parent company invested in TerraUSD.
- The investment led to a loss of millions of dollars.
- Prime Trust’s bankruptcy was severely impacted.
Prime Core Technologies, the parent company of crypto custodian Prime Trust, has reported losing $8 million in client and treasury funds from investment in TerraUSD (UST).
The revelation came as the company’s interim President and CEO, Jor Law, filed a court declaration in the ongoing Prime Trust bankruptcy case on August 24.
TerraUSD Fall Contributed to Bankruptcy
Per the court filing, Prime Core Technologies started experiencing a tremendous decline in revenues and valuation when the company’s prior management invested in TerraUSD, losing $6 million in client funds and $2 million in treasury funds in the aftermath.
Sponsored
The situation worsened when crypto winter crept in, but the company continued to ramp up its excessive spending.
“By way of example, in the month of October 2022, the Company under prior management spent approximately $10.5 million against revenues of approximately $3.1 million for a net loss of approximately $7.4 million,” read the filing.
The collapse of TerraUSD is seen as one of the catalysts that contributed to a major crypto market crash in 2022. Terra’s implosion had an extensive ripple effect on the crypto industry, and the collapse was listed as a casual event in the Chapter 11 bankruptcy cases of FTX, Voyager Digital, and Celsius Networks.
Chapter 11 Goals
In broad strokes, Prime Trust’s debtors initiated the ongoing Chapter 11 proceedings to pave the way for a focused investigation into the whereabouts of its Wallet Access Devices, which were presumed lost in December 2021 when the company couldn’t access them on the Fireblocks Platform.
The debtors are seeking protection for their assets to address the company’s financial condition in a bid to seek third-party financing and to maintain and reinstate licenses revoked, suspended, or terminated by state regulators.
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Bittrex’s Shocking Bankruptcy Splits Crypto Twitter
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