Cryptocurrency Lending Firm Cred Files For Bankruptcy After ‘Irregularities in Funds’
Cred, a united States-based crypto lending firm, has filed for chapter 11 bankruptcy protection giving a rude shock to its customers. The legal team of Cred filed the bankruptcy papers on November 7th in the District of Delaware. The legal filings revealed that the crypto lending firm had estimated assets worth $50-$100 million while their liabilities stand at $100-500 million.
Looking at customers' reactions who are now worried about their funds, it is apparent that the firm did not keep customers in the loop of things. The bankruptcy announcement comes in the wake of the October 28 announcement about stopping the inflow and the outflow of funds from the platform for two weeks.
In its official statement, the firm noted that the decision to file for bankruptcy was finalized to safeguard the funds and maximize the value of the platform for its creditors.
Customers Suspect Criminal Proceedings
The customers who have their funds locked with Cred believe that the firm is hiding something and believe it could be under investigation for financial fraud. These rumors were fueled by the statements made in a tweet from the official Twitter account of the company. After prohibiting the inflow and outflow of funds, the crypto lending platform on Twitter said that the suspension was because of an ongoing criminal investigation about possible “irregularities in the handling of specific corporate funds by a perpetrator.”
The suspension, along with the shady explanations, hardly convinced anyone, and shortly before their bankruptcy announcement, their trading and wallet partner Uphold terminated all associations with the lending firm.
Cred filed for Ch. 11 bankruptcy protection yesterday. Uphold plans legal action against Cred and its principals for breach of contract, fraud, and related claims. Any proceeds will first be used to help Uphold users who suffer losses at Cred. More herehttps://t.co/rtja2kvzMH
— Uphold (@UpholdInc) November 8, 2020
Cred later cleared that the fraudulent activity that led to the criminal investigation did not compromise any customer info or their funds. However, many users complained about not being able to access their funds in the wake of funds inflow and outflow suspension. Cred wrote on Twitter,
“No Cred systems or customer information have been compromised. We are on track to deliver a more comprehensive update in the next 7 – 10 days.”
To which a user replied,
“The funds we invested with Cred still safe with this chapter 11 bankruptcy?”
The consumers now have to wait for the court proceedings to complete the Chapter 11 bankruptcy filing before getting their hopes high.