Crypto news

Prime Trust’s parent company incurred an $8 million loss from its investment in TerraUSD.

Prime Trust’s parent company, currently undergoing Chapter 11 bankruptcy proceedings, has disclosed losses of approximately $8 million from investments in TerraUSD.

In a filing submitted on August 24th to the United States Bankruptcy Court for the District of Delaware,

Prime Core Technologies revealed that the previous management had incurred losses of $6 million in client funds and $2 million in treasury funds through TerraUSD (USTC) investments.

These losses likely occurred during the collapse of the algorithmic stablecoin in May 2022.

The company attributed the investment losses, coupled with increased spending in October and November 2022,

as contributing factors to its bankruptcy filing.

The filing clarified that while the “crypto winter” was not the sole cause of the receivership and subsequent Chapter 11 proceedings,

the company experienced a ripple effect resulting in reduced revenues.

Prime Trust filed for bankruptcy in the United States in August, estimating its liabilities to be in the range of $100 million to $500 million,

with a creditor count ranging from 25,000 to 50,000.

The bankruptcy filing followed a Nevada court’s appointment of a receiver for Prime Trust due to concerns of potential harm to users, the public,

and the overall confidence in the cryptocurrency market.

Prime Trust Reveals Massive Debts and Receivership as Terra’s Collapse Ripples Through Crypto Market

In a filing made in June, it was revealed that Prime Trust had significant outstanding debts to its clients,

amounting to over $85 million in fiat currency and $69.5 million in cryptocurrency.

However, the firm’s available assets were considerably lower, with approximately $2.9 million in fiat and $68.6 million in crypto.

As a result of the substantial deficit between its assets and liabilities, Nevada’s Financial Institutions Division took action and sought court intervention in June to place Prime Trust under receivership.

The collapse of Terra in 2022 was widely regarded as a key event that triggered a significant downturn in the cryptocurrency market.

During that year, several companies, including FTX, BlockFi, Celsius Network, and Voyager Digital, either collapsed or filed for bankruptcy.

Additionally, Terraform Labs founder, Do Kwon, is presently serving a four-month prison sentence in Montenegro due to his use of falsified travel documents.

He may face further legal proceedings in the United States and South Korea in the future.

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