The Prime Trust bankruptcy case highlights a staggering $8 million financial hit related to the TerraUSD debacle.
In Brief
The bankruptcy documents reveal not just financial loss but also the significant strain on Prime Trust's finances due to their spending patterns and a separate incident involving a digital wallet loss.TerraUSD.
The financial turmoil resulting from the TerraUSD crash, which occurred in May 2022, accounts for a staggering $6 million in client funds and an additional $2 million from company reserves.
The bankruptcy documents reveal not just financial loss but also the significant strain on Prime Trust's finances due to their spending patterns and a separate incident involving a digital wallet loss. TerraUSD The tumble of TerraUSD represents a crucial moment that triggered a massive slump in the crypto market throughout 2022, deeply affecting various firms, including Prime Trust as well as others like FTX, BlockFi, Celsius Network, and Voyager Digital, which all faced financial difficulties or bankruptcy.
The repercussions from TerraUSD's fall have severely impacted Prime Trust's financial standing, playing a pivotal role in their subsequent filing for bankruptcy protection in the U.S.
With anticipated liabilities ranging from a staggering $100 million to $500 million and a creditor count between 25,000 to 50,000, Prime Trust sought refuge in bankruptcy court following the appointment of a receiver in Nevada, aiming to safeguard its users and the larger cryptocurrency market. Prime Trust The bankruptcy filings further highlighted how Prime Trust's financial issues were worsened not only by unsustainable spending but also by an unrelated loss of funds from a wallet incident, specifically revealing their acquisition of Ethereum (ETH) valued at $76.4 million to address customer withdrawal needs when access to certain funds became restricted.
The unfolding of Prime Trust's bankruptcy reveals a tangled web of poor financial decisions, including notable losses from TerraUSD, extravagant spending habits, and another wallet issue. The company faces a stark reality illustrated by an $82.8 million shortfall in fiat and $861,000 in crypto assets, serving as a stark warning for the broader industry.
The UST stablecoin has lost its dollar value, while its companion token, Luna, has dramatically dropped in value.
Celsius Network is exploring avenues for revival while Prime Trust engages in its Chapter 11 bankruptcy proceedings.
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Disclaimer
In line with the Trust Project guidelines Holding a Master’s degree in Public Communications, Valeria is also pursuing a second degree in International Business Management, balancing her time between passion projects like photography and fashion styling. At just 13, she started her first fashion blog, which ignited her enthusiasm for journalism and style.
