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Crypto custodian Prime Trust files for Chapter 11 bankruptcy

August 15, 2023 Coin Telegraph

Bankruptcy

The crypto custodian's bankruptcy comes as it's been unable to honor customer withdrawals for months.

Crypto custodian Prime Trust has filed for Chapter 11 Bankruptcy in Delaware after it faced a shortfall in customer funds.

The company said in an Aug.15 filing that it has between 25,000 to 50,000 creditors and estimated liabilities between $100 million to $500 million compared to $50 million to $100 million worth of estimated assets.

"The Company believes that the commencement of the Chapter 11 Cases will provide a transparent and value-maximizing process for the benefit of the Company’s clients and stakeholders," it said in an accompanying press release.

The firm's top five unsecured creditors have claims of roughly $105 million — $55 million of which is the largest unsecured claim reported by Prime Trust.

*Prime Trust's largest unsecured creditor has a claim for over $55 million. Source: Stretto*

Prime Core Technologies Inc., Prime Trust, LLC, Prime IRA LLC and Prime Digital, LLC were the entities listed as the entities filing for Chapter 11 relief.

Prime Trust's bankruptcy follows Nevada’s business regulator issuing the firm a cease and desist order on June 21 saying its financial condition was “critically deficient” and was unable to honor customer withdrawals.

Days later on June 26, Nevada's regulator petitioned a court to place the firm into receivership which the court approved on July 18.

Prime Trust agreed to the petition due to what it said was a “substantial deficit between its assets and liabilities.”

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FTX ex-staffer: Extravagant expenditures and cult-like worshipping of SBF

December 15, 2022 Coin Telegraph

Bankman-Fried

A former FTX employee has revealed details regarding the lavish expenditures of the exchange as well as its intense company culture.

A former employee of crypto exchange FTX has seemingly exposed the company’s excessive luxury expenditures, obsessive workplace culture and grueling work hours leading to the hiring of a company psychiatrist in the year before its collapse.

Danielle Cloud, a former employee of FTX claiming to work in the marketing department, posted a series of Tweets on Dec. 13 saying FTX employed her in Oct. 2021 before she resigned roughly two weeks ago.

1. My ex - FTX

Two(ish) weeks ago, I formally resigned from my position as an FTX employee.
— Dani Cloud (@daniiicloud) December 13, 2022

“Things felt off. Cult-like,” Cloud wrote, describing the feeling when she first joined the exchange and comparing it to fraudulent ventures such as the luxury music festival Fyre Festival and health technology company Theranos.

She claimed to have “never heard of” FTX or its founder Sam Bankman-Fried but said “everyone employed at FTX was obsessed” with him.

“I supposed it made sense. The kid was young, the principles were revolutionary, the ideas were golden [...] who was I to challenge that?”

*Cloud (front row, center left) pictured with other FTX US employees in Feb. 2022. Image: FTX US President Brett Harrison's* *Twitter*

Cloud claimed the “best way” to land a role at FTX was to “be the female spouse of an existing employee” who could apparently within “a month or two” make their way into an executive position.

“Those who challenged it were churned,” she claimed.

Time off from work was also a “joke” according to Cloud. “The work week was Monday to Sunday,” she said and a coworker was “chewed out” for asking if the company had time off for Thanksgiving.

*Cloud with an unknown person at SALT’s Crypto Bahamas conference in May. The event was co-hosted by FTX. Image: Instagram*

Cloud started as a Know Your Customer (KYC) analyst at FTX US, the company’s United States arm, and was promoted to a full-time marketing role in May 2022 — a position that required her “to work out of the Bahamas majority of the time.”

FTX’s excess luxury expenditures

“The entire operation was iconically and moronically inefficient,” Cloud said regarding the exchange's headquarters in the Bahamas, “I never knew all the things money could buy.”

She claimed FTX either purchased or rented multimillion-dollar homes for its executives who threw lavish house parties and had private chefs.

11. The half dozen condos leased/purchased by FTX for free employee access... In addition to the expensed stays in luxury hotels. pic.twitter.com/RqCVfjm7eX
— Dani Cloud (@daniiicloud) December 14, 2022

Employees were provided “expensed stays in luxury hotels” in addition to access to the “half dozen condos” rented or bought by the company.

FTX’s Bahamian office had “food catered 24/7” with employee perks purported to include free groceries, a monthly pop-up barber and fortnightly massages.

*A still from a video taken by Cloud depicting an FTX work party at the Albany resort in the Bahamas. Bankman-Fried was known to reside at the location. Image: Instagram*

The Commodities Future Trading Commission (CFTC) on Dec. 13 filed a lawsuit against Bankman-Fried claiming he used FTX customer funds for luxury real estate purchases.

FTX reportedly spent over $250 million on real estate purchases buying 35 properties in the Bahamas as per a Dec. 13 report from CNBC.

Why a shrink was brought into FTX

Due to the high workload demands, Cloud said Bankman-Fried brought in a psychiatrist, Dr. George K. Lerner.

A now-deleted profile on Bankman-Fried written in September by venture firm Sequoia Capital described Lerner as “the person who knows [Bankman-Fried] the best” and “the FTX company therapist.”

Cloud said Lerner was “propositioned as a coach” there to consult on business growth and was said to be “critical” to FTX employee satisfaction and its retention strategy, but alleged Lerner asked her intimate questions about her relationship with her fiancé.

She also claimed administration staff were “pushed to illegally ship prescriptions to Nassau” which were written in California and Florida.

In a Dec. 13 congressional hearing FTX’s CEO John Ray said there was “no record keeping whatsoever” at the company, and many invoices and expense receipts were submitted through the messaging app Slack.

FTX also used the accounting software Quickbooks according to Ray who said he has “nothing against Quickbooks” but it’s not a tool “for a multi-billion-dollar company.”