Prime Trust Announces Potential Layoffs Amid Bankruptcy Proceedings
Crypto custodian Prime Trust, currently undergoing Chapter 11 bankruptcy proceedings, has informed employees that layoffs may affect 62 individuals within the next two months. This news follows recent workforce reductions made by the company. As of August 14, Prime Trust had 70 full-time employees and contractors. The exact number of employees currently remaining is unknown but likely no more than the reported 70.
Bankruptcy Filing and Challenges Faced
Prime Trust filed for Chapter 11 bankruptcy on August 14 after facing allegations from Nevada regulators that it was unable to fulfill customer withdrawal requests. The company encountered problems when it reintroduced “legacy wallets” to customers but was unable to access them or the associated cryptocurrencies. To meet withdrawal demands, Prime Trust used customer funds to purchase crypto for withdrawal. The collapse of Terra network’s terraUSD algorithmic stablecoin also resulted in a loss of $8 million for the firm, accumulating substantial debts in fiat and cryptocurrencies.
Bidding Process and Timeline
Bids for Prime Trust’s assets are expected to be submitted in early to mid-October, with the transaction potentially closing within the required 60-day notice period mandated by the Worker Adjustment and Retraining Notification (WARN) Act. This act ensures that employers inform employees of mass layoffs or plant closings at least 60 days in advance.
Hot Take: Prime Trust Faces Further Challenges Amid Layoffs and Bankruptcy
Prime Trust’s announcement of potential layoffs adds to the challenges faced by the crypto custodian as it navigates bankruptcy proceedings. With a reduced workforce, the company will have limited resources to manage its financial obligations and address customer concerns. The bidding process for its assets will play a crucial role in determining the future of Prime Trust and its ability to repay creditors. As the crypto industry continues to evolve, incidents like this highlight the importance of robust custodial services and regulatory compliance to ensure the security and stability of digital assets.
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