Key Takeaways
- Crypto lending service Cred suspended deposits and withdrawals due to an insider fraud incident.
- Uphold has cut all of its ties with the company and removed Cred’s CEO Dan Schatt from its board.
- Yesterday, Cred filed for Chapter 11 bankruptcy, just two weeks after reports of internal fraud.
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After halting depositings and withdrawals after a fraud incident, Cred has now filed for Chapter 11 bankruptcy in the District Court of Delaware. Cred owes at least $67 million to its creditors, according to the bankruptcy document.
Cred is also one of several lending and borrowing companies, like Celsius, to raise money through an ICO. Cred raised $26.4 million in a 2018 ICO if its LBA token.
Troubles Within the Company
On Oct. 29, cryptocurrency lending and borrowing platform Cred announced that it was halting fund 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 suspended deposits and withdrawals were related to the company’s popular service called CredEarn, which allows crypto holders to deposit their cryptocurrency on the platform and earn interest.
The company clarified that its systems and customer data had not been compromised. As such, the incident was reportedly not a security breach or system hack.
In an email, Cred informed Crypto Briefing that the company is in the process of assessing the business impact of the fraud incident in consultation with its legal team.
“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…
