Crypto Custodian Prime Trust Loses $8 Million in TerraUSD Collapse
Crypto custodian Prime Trust has admitted to losing $8 million in customer and corporate funds through the collapse of TerraUSD. The custodian lost $6 million in customer funds and $2 million from its corporate treasury. Prime Trust went into receivership in June after losing access to a wallet hosted by a third party in 2021. The company owes customers about $82 million in fiat and $861,000 in digital assets.
Main Breakdown
– Prime Trust loses $8 million in customer and corporate funds due to TerraUSD collapse.
– The company went into receivership after losing access to a wallet hosted by a third party.
– Prime Trust owes customers $82 million in fiat and $861,000 in digital assets.
– The Nevada Financial Institutions Division accuses Prime Trust of using customer funds to buy crypto companies and orders the company to stop serving retail customers.
– Prime Trust has removed executives involved in the wallet scandal, improved customer protection measures, and downsized staff.
Abandoning Crypto Custodians? Learn How to Custody Your Own Crypto
Prime Trust started serving crypto clients in 2018 when the banking industry was hesitant about the industry. It held assets on behalf of customers and kept their dollars at various banking partners. New laws in Hong Kong, South Korea, and emerging regulations in Singapore emphasize the separation of customer and corporate assets. The US Securities and Exchange Commission (SEC) has sued Binance for mismanaging customer funds, and former FTX boss Sam Bankman-Fried has been accused of commingling customer funds for risky leveraged bets.
Hot Take
The loss of $8 million in customer and corporate funds by Prime Trust highlights the risks associated with relying on crypto custodians. It is crucial for crypto investors to consider custodial options and learn how to custody their own crypto to have better control over their assets and mitigate potential losses. Regulatory scrutiny and legal challenges in the crypto industry also emphasize the importance of separating customer and corporate assets to protect investors and maintain trust in the ecosystem.
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