Crypto custodian Prime Trust to lay off majority of its staff
Crypto custodian Prime Trust, which is currently undergoing Chapter 11 bankruptcy proceedings, has reportedly notified its employees about potential layoffs of 62 people within the next two months.
The cuts primarily impact the majority of Prime Trust’s departments, though it was not immediately clear how many people were affected. The move also comes shortly after the company filed for bankruptcy in August and made massive cuts to its workforce.
While it’s uncertain what percentage of the company’s current workforce this represents, a bankruptcy filing indicated that Prime Trust had 70 full-time employees and contractors as of August 14. The extent to which these potential layoffs align with earlier reports of massive job cuts remains unclear.
Employers in the United States are required to adhere to the Worker Adjustment and Retraining Notification (WARN) Act. According to this legislation, they must provide their employees with at least 60 days’ notice in advance of “mass layoffs” or plant closings. This notice period is intended to give affected employees ample time to prepare for potential job loss and to seek alternative employment or training opportunities.
The layoffs follow a string of compliance and operational problems for the company. Most recently, it revealed in a recent filing more details about its financial losses, including its investment in the TerraUSD (USTC) stablecoin which resulted in losses amounting to $8 million.
Prime Trust’s revenues took a massive hit during the “crypto winter” in the summer 2022. However, the company continued to spend money, resulting in net losses of $7.4 million in October 2022 and $8.4 million in November 2022.
Despite attempting to raise funds, Prime Trust was unable to return to profitability. Its parent company, Prime Core Technologies, reported the financial losses attributed to the TerraUSD investments “under prior management”, suggesting that these investments played a role in the custodian’s bankruptcy filing.
Per its bankruptcy filing, Prime Trust has 25,000 to 50,000 creditors and estimated liabilities ranging between $100 million to $500 million. In contrast, its calculated assets fall within the range of $50 million to $100 million.
The top five unsecured creditors of Prime Trust have amassed claims totaling $105 million, with the biggest claim amounting to $55 million.
Prime Trust’s financial situation at the time of the regulatory petition shows a glaring disparity between assets and liabilities. While the company owed over $85 million in fiat currency to its clients, it held a mere $2.9 million in its coffers. In the digital asset realm, Prime Trust’s liabilities totaled around $69.5 million, slightly surpassing its holdings of $68.6 million.