Topic: Prime Trust's bankruptcy due to forgotten seed/private key (Read 308 times)

Sad for those people that didn't do their due diligence that they can do what PT can do for them. Just a filling of Chapter then everything's gone, good and goodbye.

Hard to believe, right? They thought that many people would buy on their alibi. But, we're not part of those people but only their customers. When they filed for that, for sure that these poor victims won't have a way to contest that if this chapter 11 has been filed. And you're right, when the bull run comes, their coins is gonna be like an awakened dragon ready to get transferred and won't have any trace from whom to whom.

The reasons were combined, misused, mismanagement and with that reason of losing the password. They can think of any other reasons that they can but their clients were the pity ones on this case.

They're like fund managers AFAIK, they're the ones to manage the money of the depositors and it's up to them whether they're going to invest it somewhere elsewhere. So basically, they're like a bank but they're serving two sectors, the fiat and cryptos.

True, there should be a process to it but it seems that they don't wanna hear any investigation so filing bankruptcy is the easiest way to go. If a complainant comes on and asks for an investigation for this one, much better to see.

Yeah, that's the whole point when we're entrusting our funds into a centralized platform. Whether they're like Prime Trust that offers various services and connections to the real world or the typical exchanges that we have on this market. While with a more reputable company, just don't put still a 100% trust.

With these companies that holds millions to billions of people's fund, I think they should have prioritize how to keep it properly with a proper back up. But on this case, it seems that it's not the whole point of it. There are many thoughts that are playing in our minds especially when people's money are involved.

Those people that are entrusting more the platforms that themselves, these people could have been staying here for so long but they're lazy to understand how to make their own wallets and keep it to themselves like the seeds or private keys. It doesn't need to go into this situation before someone has to learn it but that's it, others have to learn the hardest way.

It is the thought of many have been thinking since it's a big financial company that has people's money and gets into the crypto space, they're aware of this scenario that if ever they lost the password, they'll never get it back. But the story if going to be connected with other reasons, it's sort of coming from being negligent while being allowed to use people's money resorting into this reason.

For knowledgeable people you and the others here, it is what we'll think first about a multisig wallet. Where there will be a couple of people that's been composed to be the trustee of these seed phrases. But it seems that not that much info about that.

It's like that it's not really a mistake on their end but it's more of like an excuse just as what others were saying on this thread. And only one thing that we're thinking of with this and that's like going into an exit through chapter 11.

If the right time comes and it's surprisingly seen that the funds have moved from their main address, then we know what it is.

It isn't difficult to write down seeds or private keys. Who's going to believe the story? What they're saying happened won't be believed by ppl. If money from their addresses gets moved around in future it's going to be a new problem so it's better to tell investors what's really happened. If it isn't exit scam what is it?

This is absolutely correct. While it seems like they could have come up with a better excuse, it does seem like it's just a ploy to make people believe that the funds are irrecoverable...then, 10 years down the track, they'll import the seed and take the loot.

At the same time, it would not surprise me for a second that a company loses a private key. While it might seems surprising, a company who is focusing on security, might not have a backup of seeds or may have one that is heavily encrypted/backed up in multiple places or locations. That is a lot of circumstantial benefit of the doubt though.

This is complete nonsense, how could a crypto investment management company lose access to their wallet, this is truly an absurd reason. Even a non-tech savvy person can back up their passwords on their device, let alone a startup that manages millions of dollars in assets, there's no way they can lose access to that wallet. Surely this is an excuse made up by them, so that they can take away all the assets under management and hold them for a long period of time and then sell them later, the authorities should carry out an investigation into this startup.

Everything you buy in this world comes with double keys at least, home, car... How can someone or a group of person holding such a huge fund just simply use that excuse to file bankruptcy? I think they should be investigated for this. It is whether a shady way to escape with the money or a neglect that should be considered a crime itself.
For us, bitcoin and cryptocurrency users in general should be sure that we have our money in our hands and even when we use such service, just to do a trade, buying/selling something, then return everything to our wallet.

Holy F, this is a big mistake from their side. How can they forget a private key if they are working as a Fund Manager for others? This is so sad and also wrong for the people who invested with them.
However, this should give a lesson to others who were willing to invest money under other's wallet and can simply invest in Crypto or any asset directly using their brain cells. Still, it's sadge.

How can an establishment has a whopping $38 millon dollars worth of assets in a wallet and forgets to write down the seed phrase? It doesn't make sense, a crypto firm like this shouldn't make such a costly mistake. Individuals do make more than one back up and a crypto custodial company couldn't make a single backup, which is one of the first thing to do when creating a wallet. At some point, it did not occur to them that the wallet wasn't backed up, so that they could move the funds to a different wallet. Funds like that should have been in a multisig wallet where more than one person has access to. I don't believe this story, it is clearly an exit scam.

You can't trust investment ops offering profits that are hard to achieve. Some cryptocurrency investors don't make checks after watching videos or ads. Carrying out research's going to let them know if they're at risk. Some investors are lazy some get sucked in to scams so they'll give Bitcoin to ppl after they've gained trust.

This is what everyone is saying. I do not believe in the story of losing a private key. I mean as you said, there ought to be many backups in different locations and under the custody of different team members. The multi-sig wallet is a solution that company uses to hold their funds and most of these exchanges save part of their funds out of crypto due to high risk of scam and hacks.
Why didn't Prime Trust use hack as an excuse, I think the forgotten private key excuse is a kind of weak idea.

When company owners say they’ve lost private keys we've got their word. We can’t trust them there isn't evidence it’s their word. What's going to happen if funds moved from their wallets in future it means they've lied about losing private keys. It's asking to believe some thing unlikely happened. They could've stored private keys in many encrypted drives so I can't believe their story. After they've lost money belonging to customers they've  to be investigated for criminal acts.

 

I do not buy the "lost the Private keys" angle to this story, because a professional company will never be that negligent. Imagine someone losing the keys to a Bank vault....    I bet you, someone are going to "find" those Private keys when the bankruptcy are done and they are going to live in the lap of luxury on some island where they cannot be touched. 

You will be amazed by the so-called "team" that are behind some of these custodial services... most of them are from the corrupt Banking services, where they were taught how to steal from people. 

It's an ironic, I mean that's just make people think there's no safe place to hold Bitcoin since centralized entity can bankrupt and losing seed phrase in non custodial wallet resulting losing all of our coins.

But for people who're already understand about Bitcoin, they know which one is better and centralized entity can't be trusted since it can't be verified. Maybe now Prime Trust's cold storage is still contain Bitcoins, but after next few months all the coins are moved and then they will give excuse if their wallet might be hacked.

Exactly, although in the beginning investors might think that this is the best and safe bet for them, after all, they wouldn't bother on how to protect their bitcoins, specially investors that are not technically inclined.

But on the other hand, if you don't own your private keys and you let someone hold it for you, there are chances that they might screw it up like in this case. Now, they can't do anything and hopefully this might be set a precedent in a good way. Meaning investors would rather learn the intricacies of being a bitcoin investor like having their own hardware wallet for example and then back their own seed or private keys instead of letting some trust company to do that for them.

It might or might not be a lie. They can post the wallet and if it never moves then obviously they weren’t lying. If you think its bad, Ftx also stored private seeds for billions in an unencrypted text file over some cloud network.

There were other exchanges in the past that also lost money because their computer crashed and they lost the private key to customer funds. These days with hardware wallets this shouldn’t happen however. Especially since there are many ways like multi sig to keep funds safe.

It doesn't even matter if it's an exit scam or a legitimate screw up, it's a yet another precedent that crypto companies can lose your coins and you won't get back anything from them in court. Those people who want to be exposed to Bitcoin but not personally own it for some reason need to be ready to lose their investment in this way. So they should choose very-very carefully and not entrust their money to a startup that popped up yesterday. Better choose a company that has decades of positive reputation, though even that won't be a 100% insurance.

I agree, that when any company files for bankruptcy, the label incompetency is tagged to its management.  The company will not go bankrupt if it has capable managers and advisers.  The forgotten seed/private key is a very lame excuse to justify their bankruptcy.  It shouts a SCAM is happening.  I hope they have this incident investigated so that the truth will come to light.  I think the Prime Trusts are belittling people and think that they are too smart thinking that people will just accept their reasoning.

Another one bites the dust!!! 

And they only have one task to do, that is to protect their customers. And if they really know that they have lost the seed/private key, then why not have a investigation? They simply declare bankruptcy right away? I will echo the same sentiments here, it's very clear that they messed up and they want to hid everything thru Chapter 11 and hide their incompetency.

I very much agree with you.  There is a high possibility that the people behind the company intentionally create this reason to exit scam and enjoy the money.  It is very impossible for a big company to neglect the security and backup of its seed/private key.  Unless the owner have sole holdings of the seed or private key and dies, it is unacceptable that the bankruptcy is due to forgotten seeds.

Yeah, most likely this is just a excuse that they have lost their keys to their main wallet.
LOL, this is laughable as they supposedly Prime "trust", but then forget about their private keys, and obviously this is the best exit strategy for anyone.
Just like when the founder of Quadriga CEO, Gerald Cotten died, he had all the keys in their wallet and so all the customers money where gone.
I'm not sure who has the authority here, and maybe prosecute Prime Trust for their financial negligence.
And maybe this will set a precedence for other companies as well to just file for bankruptcy if they have problems and then with the same bullshit reason.

At first, I was just looking at this thread with no clue as to what the company was really about, as this is the second time I've come across this name, if I'm not mistaken. I was thinking it was some kind of company that is based on helping users keep their wallet phrases and private keys safe, and I almost said there should be little to nothing to worry about here since users can still reclaim their funds if they have the access at their end intact. But this is not the case, and all funds in custody are in their hands.

But what the heck is wrong with some institutions, like exchanges, where customers will trust you with their funds security as if that's not enough, and you as an exchange will take these funds and entrust them with other bodies that you see as more professional bodies to manage those funds? What's the stress of creating a multi-signature wallet and taking security upon yourself by knowing what responsibilities you have to play to make sure that customers funds are secured?

But let me ask a question because this still seems unclear to me: were there some kind of benefits that depositors get by giving out their holdings for prime trust to hold, or are they still the ones to be charged for prime trust security charges? I'm just wondering what will happen to the faith of Coinsbit customers who have their funds stored with the exchange if this escalates more than this and it appears that there is no coming back of those lost funds.

Another good incident to remind the public that “Not your key, not your coin”...