Prime Trust Crypto Custodian Signals Potential Layoffs for 62 Employees – Is the Bear Market to Blame?

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September 19, 2023

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Now-bankrupt crypto custodian Prime Trust has notified employees of potential layoffs affecting 62 individuals within the next two months, according to Nevada’s Department of Employment, Training & Rehabilitation.

This news comes shortly after the company made significant workforce reductions, CoinDesk reported on Tuesday, noting that the firm had 70 full-time employees and contractors as of August 14.

Prime Trust’s current headcount is unknown, but it is likely no more than the 70 people reported last month.

The new round of layoffs therefore means that only a handful of people are left on Prime Trust’s payroll to manage the bankruptcy process.

Liabilities of $100 million to $500 million

Prime Trust filed for Chapter 11 bankruptcy on August 14, saying at the time that it had liabilities of $100 million to $500 million from 25,000 and 50,000 creditors.

The bankruptcy filing was made after allegations from Nevada regulators that the firm couldn’t meet customer withdrawal requests.

At the time, the problems for Prime Trust were said to have begun when the company reintroduced “legacy wallets” to customers, only to find out that it couldn’t access them, along with the cryptocurrencies they held.

To meet withdrawal demands in the face of the situation, Prime Trust resorted to using customer funds to buy crypto, which could then be withdrawn.

Additionally, Prime Trust CEO Jor Law has admitted that the firm lost some $8 million in the collapse of Terra network’s terraUSD algorithmic stablecoin.

As a result, the company accumulated substantial debts in both fiat and cryptocurrencies.

Bids for assets due in October

Bids for Prime Trust’s assets are due in early to mid-October, with the transaction potentially closing within the 60-day notice period required by the Worker Adjustment and Retraining Notification (WARN) Act.

This act mandates that employers inform their employees of mass layoffs or plant closings at least 60 days in advance.