Odaily News - In the documents submitted to the Delaware US Bankruptcy Court last Thursday, Jor Law, the CEO of Prime Trust, explained a series of reasons for the company's predicament: the former management team blindly expanded expenses, made incorrect judgments about the trends in the cryptocurrency market in the summer of 2022, and no longer had physical access to the old wallets.



Law, who became the interim CEO in November last year, stated that the former leaders of the company increased expenses during a period of tight revenue. Prime Trust spent approximately $10.5 million in October last year, while revenue was about $3.1 million, resulting in a net loss of over $7 million. A month later, expenses rose again to $11.1 million, leading to another net loss of about $8.4 million.



Furthermore, the company opened a cold wallet called "98f Wallet" in March 2018 for holding tokens. In 2019, Prime Trust transferred its wallets to a system operated by the digital security platform Fireblocks. However, the company did not realize that the process of migrating from the traditional wallet to the new system had not been fully completed, nor did it realize that the addresses it provided to customers still allowed funds to be deposited into the "98f Wallet." It was only when an unidentified customer requested a large withdrawal of ETH but the company was unable to meet the withdrawal demand that they became aware of these errors. To make matters worse, Prime Trust soon discovered that they no longer had physical access to the equipment required to access the old wallets. Law stated that currently, Prime Trust still cannot access the 98f Wallet.



Law stated that afterward, "certain company employees" started purchasing ETH with the fiat currency in customer accounts and met withdrawal requests between December 2021 and March 2022, totaling over $76 million. Since then, Prime Trust's problems have gradually worsened. (Decrypt)



Previously, Prime Trust's parent company, Prime Core Technologies, stated that the company had lost $6 million of customer funds and $2 million of treasury funds due to investments in TerraUSD. The company stated that this investment, along with increased spending in October and November 2022, was the reason for their bankruptcy filing.



In the face of a shortage of customer funds, Prime Trust has applied for bankruptcy protection under Chapter 11 of the Bankruptcy Act in Delaware.



In the documents submitted on August 15th, Prime Trust stated that it has between 25,000 and 50,000 creditors, estimated liabilities between $100 million and $500 million, and estimated assets valued between $50 million and $100 million. The claims of the company's top five unsecured creditors amount to approximately $105 million, with the highest claim amounting to $55 million.