- Cred has filed for bankruptcy following a still unknown “fraudulent incident” that occurred last month
- Cred had disabled deposits and withdrawals for over a week after the incident was revealed
- User funds could be at risk, with what little money is left likely to be divided by administrators
Cred, the blockchain banking system which last week revealed that a “fraudulent incident” had resulted in them halting CredEarn deposits and withdrawals, filed for bankruptcy on Sunday night, leaving users facing a loss of funds. A legally-worded press release was posted late Sunday following the filing, with no notification made on the company’s social media accounts. The filing means that the company has admitted it is out of cash, with creditors preparing to fight over what little is left and former partners like Uphold preparing lawsuits.
User Funds Likley Gone
Cred’s problems began on October 29 when they sent an email to users warning of the unspecified fraudulent activity that had caused them to cease withdrawals and deposits, stating that an update would be forthcoming within two weeks. This update has now arrived in the form of a bankruptcy filing, with little further information coming out of the company, a situation which is even less likely to change now that the administrators are in charge.
The sad fact is that customers who held money on the CredEarn platform may have lost everything, with a fight between creditors over whatever funds are left now inevitable. One of those will be the crypto/fiat bridge Uphold, which has been working with Cred for over two years, but announced that it is taking legal action against them:
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
In fact, Uphold was more open than Cred about the situation last week, saying in a series of tweets they were “not sufficiently reassured” by Cred as far back as October 23 when rumblings of a potential issue first surfaced. The company now plans to sue the company “for breach of contract, fraud, and related claims” on behalf of its customers.
Cred Users Face Anxious Wait
As for those with funds tied up on the CredEarn platform, there is little they can do now. An FAQ section has been set up on Intercom, but the fact of the matter is that in filing for bankruptcy the company has admitted that it is broke and has taken its first steps towards dissolution.
Administrators will now compile a list of creditors and will begin to divide up what little money is left, if any, between them, with users left in the dark about where their money is and what happened.