The Prime Trust estate has successfully secured a $9 million default judgment against Polo Digital Assets LTD, the firm that operates the Justin Sun-owned cryptocurrency exchange Poloniex. The legal action stems from an adversary proceeding filed by the Prime Trust estate regarding preferential property transfers made prior to its bankruptcy.
Before filing for bankruptcy, Prime Trust elected to terminate its business relationship with entities linked to Justin Sun, including Poloniex. This decision was prompted by an ongoing Securities and Exchange Commission (SEC) lawsuit against Sun, which has since been dropped. As part of winding down the relationship, Prime Trust transferred more than $9 million to Poloniex and Sun.
Prime Trust subsequently entered bankruptcy following deep insolvency issues. The financial collapse was driven by failures to adequately custody cryptocurrency and the subsequent use of customer deposits to cover the resulting shortfalls.
To recover assets, the Prime Trust estate initiated a clawback lawsuit for the funds transferred to Sun and Poloniex. The resulting $9 million default judgment currently applies only to Polo Digital Assets LTD, while the estate continues to seek discovery regarding Sun himself.
Poloniex is not the only entity associated with Sun facing legal action from a bankruptcy estate. The FTX estate has also filed lawsuits against Sun, as well as Sun-owned entities HTX and Poloniex.
