Crypto VC King River Capital has $11m hole thanks to collapsed Trigon
Trigon Trading, which trades as TrigonX, was founded in 2016 and billed itself as an over-the-counter trading desk that primarily deals in digital assets and cryptocurrencies including bitcoin, ethereum, stablecoins and foreign exchange.
According to an administrator’s report prepared by Marcus Ayres, director of restructuring at Kroll, Trigon’s books showed it had sales of $1.7 billion and $4.5 billion in 2021 and 2022, respectively.
The report also shows that King River Capital had about $20.4 million ($30.5 million) deposited with Trigon last November.
But when the Sydney-based VC firm heard rumblings that Mr Bankman-Fried’s FTX, the world’s third-largest crypto exchange at the time, was struggling to process withdrawals and there was widespread volatility in the crypto markets, it instructed Trigon to move $19 million to another manager.
Over the next two days, King River transferred an additional $6 million worth of USDC – a type of stablecoin pegged to the US dollar – to Trigon, instructing the firm to exchange for US dollars.
But according to the Kroll report, Trigon later told King River that $9.5 million of the firm’s money was deposited with FTX at the time of the collapse, and that $9 million was stored at Signature Bank, a crypto-friendly bank. which has since been shut down by US regulators.
“This is the essence of the case that is now before the courts,” the King River spokesperson said, referring to the money exposed to FTX.
Kroll’s report also points out that no account was taken of a discrepancy between the two amounts, totaling $1.9 million.
Neither Salerno, nor any representatives from Trigon, responded to questions on Sunday.
The Kroll report said Trigon’s failure was caused by a number of factors, including the collapse of FTX and legal action brought by King River Capital, which has about $31.5 million locked up in the company. ADG Digital wants to reclaim around 16 million dollars.
The third largest creditor is the Pacifika Consortium with a balance sheet worth about $26.8 million, a company formerly known as the Salerno Consortium, according to the Kroll report.
Other factors that contributed to Trigon’s collapse included “significant cash spending and related party mingling,” poor record keeping and poor corporate governance, Kroll said in his report. The creditors will meet on 5 April to discuss Kroll’s recommendation that the company be liquidated.
Beyond the dealings with King River Capital, the administrator’s report also reveals a wide-ranging set of irregularities within the Trigon business, including a series of cash transfers to Mr Salerno and his wife just weeks before the Gold Coast firm collapsed.
“The quantum of cash flows following the FTX collapse is particularly noteworthy,” Ayres wrote in the report.
“We note that following the FTX collapse and prior to the appointment of administrators, employees and the director were paid approximately $1.7 million.”
These “potential preference payments” include four equal payments to Mr Salerno in early December for $576,000 in “consultant fees” as well as four equal payments to Mrs Salerno totaling $285,000. The payments were backdated to 2021.
