A crypto startup goes bankrupt after losing password to a physical wallet with $39 mill US in it

[thewayne]

Are we surprised? I hear the sounds of lots of heads vigorously shaking 'no'.

There are two types, largely speaking, of crypto wallets: online and offline. An offline wallet is where the information is written to some sort of physical media and disconnected from any computer or internet connection unless you need to access the keys. Then you have to enter a long password or recovery phrase.

Well, these 'brilliant' people at Prime Trust created an encrypted physical key into which deposits were made, ultimately totaling almost $40,000,000US, including Etherium and Bitcoin. And the actual keys were burned onto titanium objects. At no time were paper or apparently electronic copies of the keys or recovery keys made.

And the physical recovery keys were lost.

And they didn't record the recovery phrases.

And now the money held in that wallet can never be recovered. You can only make X number of attempts before the device wipes out all the data.

Now, here's the great part. The company marketed itself as a "...crypto fintech company designed to help other startups offer crypto retirement plans, know-your-customer interfaces, ensure liquidity, and a host of other services. It says it can help companies build crypto exchanges, payment platforms, and create stablecoins for its clients. The company has not had a good few months. In June, the state of Nevada filed to seize control of the company because it was near insolvency. It was then ordered to cease all operations by a federal judge because it allegedly used customers’ money to cover withdrawal requests from other companies."

I would scream so loud if I found out that my retirement plan had any portion being invested in crypto!

https://www.404media.co/crypto-startup-prime-trust-files-for-bankruptcy-after-losing-password-to-38-9-million-crypto-wallet/

https://slashdot.org/story/23/08/26/0318207/crypto-startup-bankrupt-after-losing-password-to-389-million-physical-crypto-wallet

Comments

[disneydream06]

O.M.g.!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

The Stupid just keeps getting better. :o :o :o
Hugs, Jon

[warriorsavant]

"Crypto" being the modern phrase meaning "snake oil."

[thewayne]

Absolutely.  A lot of people recognized it, but a lot of fools did not.

[devilc]

Buttcoin over on Reddit has been having a field day with this one.

[thewayne]

Oh, I'll bet!

[silveradept]

It must be fantastic to operate in such a well-regulated environment that a lost password can result in nearly forty million dollars of your assets becoming permanently unavailable. If only there were some sort of guarantor or backstop that could insure the deposits of ordinary people into financial vehicles such as that, just in case something went wrong.

[thewayne]

Yeah, according to the article, they were operating very fast and loose with regulatory compliance.  As so many of these crypto startups are.  "Move fast and break things" indeed, all to the tune of $40mill of someone else's money!