Crypto custodian Prime Trust filed for Chapter 11 bankruptcy in the United States state of Delaware on Aug. 14 after reporting shortfalls in customer funds. Prime Trust said it’s working with 25,000 to 50,000 creditors and has liabilities of up to $500 million.
Although the news of the company’s financial instability broke mid-way through August, members of the crypto community months had already flagged the company’s shaky position weeks before the filing.
On June 27, the business regulator in the state of Nevada issued a cease and desist order to Prime Trust after it alleged the custodian had a shortfall of customer funds and couldn’t honor customer withdrawals.
Cryptocurrency exchanges BitGo and CoinMetro posted on X (formerly Twitter) about service disruptions at the hands of Prime Trust during that time period.
Members of the crypto community immediately responded to these updates, with one user claiming Prime Trust was “going bust” on June 22.
Looks like a bunch more people are going to be getting in line in bankruptcy court.
Prime Trust is going Prime Bust. The real question is how long has the money been missing, and where did it go?
The best way to run a Ponzi scheme is to create thousands of smaller Ponzi schemes… pic.twitter.com/eUdVLMyZHE
— Things Sam is Freaking Out About (@Bitfinexed) June 22, 2023
Although…
