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Card files Bankruptcy

by Carolina Lynch

Crypto lending service Cred has suspended deposits and withdrawals due to an insider fraud episode.

Cred has filed for Chapter 11 bankruptcy, just two weeks after reports of internal fraud came to the surface. 

Cred files for Chapter 11 bankruptcy

Cred has now filed a Chapter 11 bankruptcy after it has stopped its deposits and withdrawals following a fraud incident. It has filed for bankruptcy in the District Court of Delaware. As per the reports Cred currently owed $67 million to its creditors. In an ICO back in 2018, Cred raised $26.4 million but nothing seems right for the lending and borrowing company as of now. 

Cred’s doom

On October 29th Cred took to  Twitter to announce its decision to halt both deposits and withdrawals. 

We deeply regret causing so much concern as we assess the business impact connected with a recent fraudulent incident. Cred is cooperating with law enforcement authorities to investigate the incident. However, no client personal data or account information was compromised.

— Cred (@ihaveCred) October 29, 2020

The services that have been suspended were due to the company’s much-touted and popular service called CredEarn. This is one of those features that was rolled out in order to allow crypto holders to deposit their cryptocurrency on the platform and earn interest. The company has doubly ensured to the users that neither its systems nor the valuable customer data have been compromised. The withdrawal of the service was not due to any security breach or hack. In an email Cred informed: 

“We know this limited information is not sufficient to understand the status of your funds, we deeply regret any stress this ambiguity has put on you. Many Cred employees, family members, and partners have their funds with CredEarn as well,” Cred’s support staff wrote to Crypto Briefing.

It has assured that at present the Cred team is doing everything by the book to assess the business impact of the fraud with its legal team. Cred further implied that it was experiencing irregularities in the handling of specific corporate funds. This is the work of an insider who jeopardized its balance sheet that led to the internal investigation and the loss of funds. 

Uphold withdraws partnership with Cred

In 2019 Uphold partnered with Cred in order to fulfill the user demand for yield farming. But recently they have cut all their ties with Cred especially the 3’rd party links with their wallets. Uphold divulged a few details about the insider fraud. 

“Cred appears to have had the extraordinary bad luck of employing an alleged fraudster, who is accused of stealing money and making bad investments.”

Uphold also had good ties with the CEO of Cred, Dan Schatt who has now been removed from the position. The details of the fraud and the amount in the lurch are not clear.


The information discussed by The Coin Magazine is not financial advice. This is for educational and informational purposes only. Any information or strategies are thoughts and opinions relevant to accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Do your due diligence and rating before making any investments and consult your financial advisor. The researched information presented we believe to be correct and accurate however there is no guarantee or warranty as to the accuracy, timeliness, completeness. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright The Coin Magazine All rights reserved.

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