Crypto firm(custodian) Prime Trust recently collapsed and court documents show they owed around $85 Million to customers but only has $3 Million to pay customers from. Not your keys not your crypto is very real

Prime Trust is a crypto custodian, such that they generally hold crypto on behalf of customers. They apparently did business with the likes of Celsius, FTX and Binance US, ironically the first two of who have been involved in fraud of their own and Binance facing allegations of.

Court documents reveal that Prime owes fiat to customers of around $86M USD but only has $3M USD to pay them with. In addition, they also owe customers crypto of around $69.5M of USD value but are short around $1M of this crypto. This is worse than it sounds because given that crypto prices have been risen very significantly over the course of this year, and very recently has well, quite a lot of their losses would have been offset by market price increases.

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https://preview.redd.it/djhxac769c9b1.png?1324&format=png&auto=webp&s=a031f19ca1ea7bb2fa00866de7e15c5e7a54278e

The idea of using a custodian is sort of weird in the first place IMO because you should always take self-custody and here you have a number of business actually paying a business to take custody for them. But there are some instances where it's preferred or required legally.