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Cred unofficially indicated that it filed for bankruptcy protection “to maximize the value of its platform for its creditors”.
Not your private keys, not your coins? Another crypto scam leaves unsuspecting customers with more questions than answers. This time a crypto lending provider Cred Inc has been involved in a fraudulent activity that has stolen millions of customers’ funds. In fact, Cred went ahead and filed for a United States chapter 11 bankruptcy protection as more customers grew weary of the company’s updates.
According to court documents, the legal team for Cred CEO Daniel Schatt filed bankruptcy papers for the company in the District of Delaware on November 7. Cred Inc is facing estimated customers’ claims of up to $500 million. Whereas it has estimated assets of between $50 and $100 million.
As a result, the firm is not capable of repaying all its customers deposited cash in time and thus filed for bankruptcy protection.
Cred Fraudulent Activity and Bankruptcy
Cred unofficially indicated that it filed for bankruptcy protection “to maximize the value of its platform for its creditors.” In the meantime, Cred customers are complaining all over different social media platforms for their funds to be refunded.
Notably, one customer went to Twitter with transaction details of his stolen XRP. “I can also see that my XRP is deposited on CRED in my last transaction 7250 XRP successfully deposited on CRED 1 day before they blocked all users to withdraw and deposit,” the post reads, including a link to more transaction details.
Cred closed all inflow and outflow of its system in October after citing irregularities in handling of specific corporate funds. The firm claims the perpetrator is in law enforcement’s custody helping with further investigations. With its customers now closely monitoring the proceedings of the chapter 11 bankruptcy protection, hopes of getting refunded soon diminish by the day.
In an emailed press release, Cred said Grant Lyon has been named to the company’s board to oversee the restructuring process. It has also hired MACCO Restructuring Group as a financial advisor to evaluate M&A and other restructuring opportunities.
Apparently, Uphold – a major US cryptocurrency wallet and trading platform- discontinued its partnership with Cred following the incident. As a result, Uphold customers can no longer link their crypto wallet to the Cred system. In addition, all customers’ crypto balances will appear in respective wallets.
On the Flipside
It is a huge and growing concern in the crypto industry as more and more crypto firms vanish with customers’ funds. In an ongoing investigation, OKEx users are still not able to access their funds after a similar fraudulent incident.
Moving forward, since the crypto industry is here to stay and grow, customers will have to take responsibility for their wallet private keys.
In addition, it is high time that crypto firms seek insurance policies that can ensure cryptocurrency customers get a refund of their capital in such cases.