Cred, the US-based cryptocurrency lending service, has filed for Chapter 11 bankruptcy protection on November 7 (Saturday), leaving many customers searching for solutions to get their funds.
It has been reported according to court documents that the legal team for Cred CEO Daniel Schatt filed bankruptcy papers for the company in the District of Delaware on Saturday.
However, Cred listed its estimated assets at between $50-100 million and its estimated liabilities between $100-500 million.
The company said that it had filed for Chapter 11 in an attempt “to maximize the value of its platform for its creditors.”
Likewise, the bankruptcy filing comes after an announcement on October 28 that the platform would be suspending fund inflows and outflows for two weeks.
Cred stated on Twitter that the suspension was not due to any criminal investigation but the platform was working with authorities “to help investigate irregularities in the handling of specific corporate funds by a perpetrator,” citing a “fraudulent incident” as the cause.
1/2 We would like to further clarify that Cred is not under investigation. Cred approached law enforcement to help investigate irregularities in the handling of specific corporate funds by a perpetrator. — Cred (@ihaveCred) October 30, 2020
Shortly before the announcement, Uphold, the cryptocurrency wallet and trading platform, terminated its partnership with Cred.
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
As per the report, at least one Uphold user had been having technical problems with the platform’s CredEarn program allegedly caused by Cred. After the dissolution of the Uphold partnership, the user claimed that he had around $140,000 in Bitcoin (BTC) and other assets locked in his Cred account.
Likewise, Cred has said none of its systems, customer accounts, or customer information was compromised in the “fraudulent incident” but has not issued an update on Twitter or by e-mail to its users since October 30 regarding assets accessed using the platform.
2/2 We also want to acknowledge the concerns expressed about Cred being hacked. We can tell you that's not the case. No Cred systems, customer accounts, or customer information have been compromised. — Cred (@ihaveCred) October 29, 2020
One Twitter user said:
“We just want to know that our funds are safe. Please address this on your next update, not an announcement to the next announcement.”
Moreover, the platform has updated its website to include information on the Chapter 11 filing, but many users did not get the message.
Crypto Twitter user AwsomeNada claimed to have 7,250 XRP, around $1,829 at the time of publication, deposited on their last transaction before fund inflows and outflows were suspended.
AwsomeNada said:
“I want to know how this can be resolved. I need my money back today.”
Users made similar claims of losing access to “thousands of XRP” and other assets without hearing if their funds were safe during the bankruptcy process.
Thank you Wendy ❤️😔 Lost thousands of $XRP. But I feel more sorry for those who put all their XRP in there. For me it is bad, but for others it is their entire stash. Still hope. As far as I know a Chapter 11 is not the end, but might have to wait for a long time for the zerps — Research Omega (ARO) (@research_omega) November 8, 2020
While both fund inflows and outflows will seemingly remain inaccessible as Cred goes through the Chapter 11 process, other exchanges have also been giving users reason to see the meaning behind “not your keys, not your coins.”
Thus, digital asset withdrawals have remained closed on crypto exchange OKEx since October 16 amidst rumors the police have detained its founder.
Source: Cointelegraph