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The company that owns Prime Trust, a company that takes care of cryptocurrencies for people, has said that it lost about $8 million because of its investments in a cryptocurrency called TerraUSD. This parent company, called Prime Core Technologies, is going through a process called Chapter 11 bankruptcy, where they’re trying to sort out their financial problems.
They explained in a document they gave to a court in Delaware on August 24 that they lost $6 million of their customers’ money and $2 million of their own money because of the TerraUSD investments. This loss happened when TerraUSD’s value went down a lot in May 2022.
Because of these losses and because they spent more money in October and November 2022, the company had to declare bankruptcy. They also mentioned that the “crypto winter,” a period when cryptocurrency prices went down, affected how much money they were making.
Prime Trust decided to go bankrupt in the United States. They said they owe somewhere between $100 million and $500 million to different people or companies, and they have between 25,000 to 50,000 creditors. Before this, a court in Nevada had chosen someone to take control of Prime Trust because they were worried that Prime Trust’s problems could hurt the people using cryptocurrencies and the confidence in the cryptocurrency market.
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In June, it was revealed that Prime Trust owed more than $85 million in regular money and $69.5 million in cryptocurrencies to their customers, even though they didn’t have that much money in both of those categories. The financial division of Nevada had taken control of Prime Trust because there was a big difference between how much money they had and how much they owed to others.
The collapse of TerraUSD in 2022 is thought to be a big reason for a crash in the cryptocurrency market. During that year, many companies like FTX, BlockFi, Celsius Network, and Voyager Digital were also having big financial problems or going bankrupt.
