Prime Core, in its recent filing with the United States Bankruptcy Court for the District of Delaware, stated that the firm lost $6 million in client funds as well as $2 million in treasury funds under the previous management as a result of the TerraUSD collapse in may last year.
Furthermore, the company deemed the loss of investment along with increased spending in October and November to be the major contributor to its bankruptcy filing. The company clarified that the crypto event was not exactly an event that led to the receivership along with the Chapter 11 bankruptcy cases, but it did feel the ripple effect caused by the crypto winter.
As a result of this effect, Prime Core had to face severely depressed revenues. Prime Trust had to make the decision to file for bankruptcy in August, and it is estimated that the firm had liabilities ranging from $100 million to $500 million and between 25,000 to 50,000 creditors at the time.
The filing followed an order from a Nevada court that ordered the appointment of a receiver for Prime Trust as a result of the risk of irreparable harm to users, the public, as well as confidence in the crypto market.
Prime Core Isn’t the Only Victim of the Terra Crash
A filing from June reported that Prime Core owed more than $85 million in fiat as well as $69.5 million in crypto to all of its clients. However, at the time, the firm held almost $2.9 million in fiat and $68.6 million in crypto.
The sudden collapse of the Terra ecosystem back in 2022 was classified as one of the major events that led to the overall crash of the market. As a result of that development, countless firms and cryptocurrency exchanges either collapsed completely or had to file for bankruptcy filing not too long after. Some firms that crashed include FTX, BlockFi, Celsius Network, and Voyager Digital.
Currently, the founder of Terraform Labs, Do Kwon, is serving a four-month prison sentence in Montenegro on the basis of using false documents. It is expected that Kwon might face additional prosecution in the USA and South Korea.