The CEO of Prime Trust, Jor Law, revealed in a court filing that the company lost $6 million belonging to clients and an additional $2 million from its funds due to a failed investment in the terraUSD algorithmic stablecoin.
Law, who became CEO on November 29, mentioned a situation from January 2021 where customers were instructed to send money to the wrong wallet, which the company couldn’t access.
Due to the wrong wallet address, Prime Trust spent $76 million to purchase ether (ETH) to fulfill withdrawal requests.
In June, Prime Trust, which was later placed under the control of a receiver and declared bankruptcy, faced a situation where they owed customers $861,000 worth of digital currency and almost $83 million in regular currency, as explained in court by Law to the Delaware court.
Even after that incident, the Prime Trust company kept increasing its spending and sometimes spending a lot on things that seemed unnecessary.
This turned out to be a valid concern because just five days later, regulators in Nevada took legal action to take control of Prime Trust and its parent company, Prime Core Technologies.
Prime Trust was supposed to be bought by another company called BitGo. However, BitGo decided not to buy Prime Trust anymore because they were worried about Prime Trust’s financial situation.
Also Read: Crypto Custodian Prime Trust Filed For Chapter 11 Bankruptcy
