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”...

They misused their customers' funds and experimented with different coins. By investing in TerraUSD they lost their customers' $6 million dollars funds Prime Trust Lost $8M in Doomed Terra Stablecoin Investment, CEO Says so they misused their customers' funds as they wished and eventually declared themselves bankrupt!

The fact that who was running such a big company would make the mistake of forgetting the private key is the biggest surprise, it doesn't seem believable to a common man like me. It's actually a story they made up. Due to their one wrong decision after another the company has gone into losses and now they have come up with this story so that they don't have to return the remaining funds to the customers. This incident brings yet another warning to crypto users about how important it is to keep funds to yourself, because Not Your Keys, Not Your Coins.

Until it happens to them most people will never learn, it is sad but that is the way it works as those people simply assume that something like this will never happen to them and it only happens to others, and then when it finally does they cannot believe this is the case and they feel indignant about it, now if they are smart they may learn after such loss, but even a great deal of those which were scammed will still not learn their lesson and they will need to experiment this many times before their behavior finally changes.

This is too bullshit reason to file bankruptcy for their losses since they are custodial company which ironic to lost their keys while their service is safely manage invetors funds.  Losing private key is the most convenient reason to file loss on crypto since it’s very to prove that you are lying unless polygraph test is admissible in court.

This is an exit plan and probably this coin will sleep in there for a long time untile the issue cool down while solving everything using the bankruptcy funds.

In the famous words of the Sith Lord: Good, good!
Less bitcoins on the market.


That's the sad part. I bet these people had no idea what they were buying. They watched CNBC for a while and googled how to get bitcoin easy without a risk of being hacked or scammed... so they got someone who could do it for them and... that's how they got scammed.

Yes, I think that it was a scam. There's no way someone would start a bitcoin company without knowing how to create backups.
That said, Karpeles changed Magic the Gathering card trading site into a bitcoin exchange and scammed everyone, so shit sure happens in this industry.

I think that these corporations have got the idea of what they're doing from the first ones that have probably done the same thing. And they're not just a few but several companies that hides their main purpose and tries to stir things up through making it like they're a dumb company that have lost the password for their corporate wallet.

Well, it's not going to change for a long time not until everyone has been a victim of these services and lost the funds that they've worked hard for. The trust that one's commit is because they're registered and covered by government laws. But these people don't know that when situation like this escalates, there's no way the government can help them get those refunds if all has been wiped. Everyone will learn the lesson the harsh way even if we don't want to.

That's sad. It's really possible that they can get away, give some excuse that they have really forgotten the wallet to make people gullible that they really do. For sure that there's gonna be orgs or individuals that will monitor the wallet that have been said that they've lost. So, no surprises if it gets accessed by anyone and soon may be told as "hacked" wallet and funds to reason again.

As much as we don't want investors to experience something like this, it's like this event is inevitable as there will be more newbies that will come to the market prior to the bull run halving. And the sad thing is that they're going to trust more of these custodial services than to listen to the people that tells them to hold their own crypto.

That's probably right that funds could have been gone and gambled, and this is possible due to what happened to FTX fiasco and Bankman's spending. As for the shit coin: Prime Trust Lost $8M in Doomed Terra Stablecoin Investment, CEO Says and there could be more.

We're all feeling bad and sympathy is always with the victims and not with these greedy corporations that have been using their customer's money as their ladder for their own personal gains and sakes. I am pretty sure that there could be people interested on this case and won't be dumb to believe their potential fake story.

Maybe on Service Discussion?

I guess it's gonna be long until we will finally hear the real story behind this but, it would be amazing and good to hear someone inside that can't take what's happening and will speak the truth behind this.

Yeah, sooner or later the truth will come as this is still a developing story and news but one thing is for sure that they've filed for bankruptcy. I remember that story also about killed CEO that he's the only one who knows the keys. I think that we're seeing the same story and style but if the story about that and life was taken for real, rip to him.

The story is hard to believe and laughable that such a company like prime trust would be this negligence to lose their private keys understanding fully the importance of those keys not just to them but to the multitude of investors that have placed their financial trust on them. There's more to this story that we can't determine at this stage and time.

If the keys are later to be found by some anonymous group or fellow years probably when the case would died down then I'll believe what the tiny voice in my ears is telling me, that yeah it may be an exit plan and not negligence.

This is what will continue to happen as people continue making same mistakes of keeping their funds in the custody of a third party. When you care-less of taking responsibility of your private keys by holding your funds in a selfcustody wallet you should be ready to accepts these sorts of stories because it will keep happening one way or the other, accept it or not.

Such types of companies do not only provide services to protect shit coins; instead, they provide services to protect all types of assets like bonds, stocks, forex, and BTC too. But there is an obvious thing that those who are well aware of the nature of BTC know: what it is promoting and why people are adopting it, referring to its decentralization nature. Then why would people deposit their funds or BTC on such a platform that cannot even hold their hands on the keys and recovery phases they have made?

This definitely looks like a rug-pulling plan, but we should not jump to conclusions so fast; instead, read the whole story. But honestly, even after reading the story, it seems so unbelievable to think that a company mainly made to provide protection services has lost the key to their wallets. I mean for real.

A lot of companies are just some shell companies which are used for bad purposes like Money laundering and these companies are mostly not new. They are old ones to gain trust of the people on it and when they gain enough money they do this. As they have a legit reason to. I hope this issue will be resolved with the help of some recovery operation if some legit investigator will do it.

Well, it's also very easy to claim the keys or seed was lost/misplaced.
I won't say the loss is for real or not, it's also hard to prove anything. The only proof could be if one of those owners (or a random employee maybe!) suddenly disappears (goes under the radar for a great retirement).

You know, one would expect for a fintech company they'd use multisig wallet, to make not only safer, but also more fair if there are more owners, but meh...

How could a company not prevent this because it doesn't have a lot of backup initial phrases? Obviously this would not have made sense and ironically it seems to be planned to file for bankruptcy of their company.

The only thing they are protecting is worthless shitcoin which is clearly their negligence with a lot of misuse of customer funds.
It's like a drama they are planning, how can a company buy shitcoins that have no liquidity?

This seems to be so unbleivable that one like me will definitely say this is just an exit plan because if it's a fintech company, then how did they come to lose the keys to funds, and first of all, why are they keeping all the funds in a single address? To be honest, I feel sad for the ones who lost their funds, but AFAIK, if they would hire someone good at investigation, then the chances are that they might get access to the key. Of course, the recovery operation depends on which device (HW, software wallet) they are using: did they create the recovery key using offline systems or online? Did they create the key using some specific cypher with some key? Then they might regenerate the key.

I mean, if they are managing the funds of others, then they at least should create the key from some generators with their own encryption key to enhance the security, and if they do it, then they must use the same key to regenerate the key.

And I do not know how this is directly related to Bitcoin, which you made a topic of this discussion.

From the https://decrypt.co/152508/prime-trust-chapter-11-bankruptcy link:


So they lost the keys AND bought a ton of some shitcoin / token.

Since they are / were a Nevada company might as well as gone to Las Vegas and bet it all in a video slot machine. This was you can see all the blinking things on the screen as your money disappears.

And their website is still up and running without a mention of what is going on.

Another day, another bunch of people who can't figure out the magical internet money machine is a myth.

-Dave

It's Ironic that a company that is supposed to provide custody for the cryptocurrency has actually lost the seed/ recovery seeds so now all those funds are stuck?

I don't know how many lessons are needed for investors to remember the significance of self-custody of their crypto assets to mitigate this kind of situation. As far as I can read it's about 40 Million dollars worth of assets it's huge so hopefully people will take this into consideration next time if they opt for custodial service.

One more reason to say Not Your Keys, Not Your Coins.

This is obviously a hoax. Anyone storing 40 million dollars worth of assets will take at least the precaution of having a backup, if it's a company they will have several backups held by different members of the board or put it in a multi sig wallet so no singular member of the board can sign a transaction without the other.

They will probable wait a while and then claim another party has possibly gained access to the wallet, and then liquidate all the funds on it through mixers and the court will not be able to act cause they do not have any proof of the scam.

So weird to see that some people are still interested in using this services for nothing than to later regret about their decision with them, mamy we should assume it's a mistake common to newbies or even most user's experience in tgis know about the risk but can't help thwn to deliberately risk their asset with thm, when it's not your keys the coins does not belong to you, this is ot a joke but the fact of the matter, i believe with this same experience, eome have learnt their own in the hard way.

This is absolutely a planned exit bud, never should we believe all these lies that they tell us, a criminal will always have an excuse and when coming up with such excuse, they will look for one that seems very true and appealing and believable.

I personally believe that nobody in their right senses will lose a private key or seed phrase to a wallet containing such an amount of money, 38.9 million dollars is not child's Play, they have probably planned it all and are ready to Battle/defend this claim whether it takes them years,  at the end of it all, when everyone has forgotten, they will quietly withdraw this money and start enjoying themselves meanwhile those that have lost have lost...

Not your keys,  not your crypto , those who have refused to listen and believe in this the soft way,  will have to learn to believe it in the hard way.

So, this news was a few weeks ago and I haven't seen someone posted it yet. Just a quick background of what Prime Trust is, it's a fintech company that manages assets of its customers, yeah a custodial service. See the reference:


Going on, they've filed for Chapter 11 (bankruptcy) and if we're going to search for some reasons behind that. Mostly, it's all about the mismanagement, liquidity issue and misuse of its customers funds, etc. which is written all over several articles:

• Crypto Custodian Prime Trust Files for Bankruptcy
• Crypto custodian Prime Trust files for Chapter 11 bankruptcy
• Crypto Custodian Prime Trust Files for Bankruptcy Protection

and many more...

Now the part that I've like to share is their negligence of one of the main reason why they fell is because its owners have lost the control to their keys. Yes, you've heard that right, they've lost the seed phrase of their wallet.

• Crypto Startup Bankrupt After Losing Password To $38.9 Million Physical Crypto Wallet

They've got tons of customers and money on their custody and they just lost it. Maybe a planned exit? or just truly negligence of its owners.

This is the reason why we shouldn't keep funds into these centralized/custodial services and exchanges.