“It is worth mentioning that the company did not tell regulators or customers about this issue for months after it discovered the problem.”
Prime Trust etched its seed phrases into steel for safety, then lost the steel. It kept taking customer deposits into the locked wallet for years and only noticed in December 2021, when a big withdrawal came due. It spent $76 million buying ETH to cover the hole. The bankruptcy filing calls it “extremely unlikely to occur again,” which is true, since there is no company left to do it.