- Cred has taken a massive battering to its cred after balance sheets fail to add up
- Cred promises an update to its users in 2 weeks time – a lengthy wait for users who can’t touch their funds
- This isn’t the first time we’ve seen ba;ance sheets fail to add up, and they seldomly fix the issue and get back on with trading quicklys
Cred is a project that touts itself as blockchain’s answer to the current banking system, and on paper, it has a wide range of pretty neat products. Offering you the ability to put your crypto up as collateral for instant loans, Cred had some of the best interest rates around at up to 10%.
But, after a recent tie-in with UpHold, Cred has suspended all deposits and withdrawals relating to CredEarn after it noticed that its balance sheets don’t add up. In a brief statement on Twitter, Cred gave its users a heads up and stated that it will provide a further update in around 2 weeks…
2 Weeks is Too Long
CredEarn appears to be the service that’s impacted here, and this is arguably Cred’s biggest USP. Essentially, you stake your tokens into Cred’s liquidity pools and it then lends it out to retail borrowers and money managers with “well established records”. You then get given a cut of the money made and your crypto is returned after 6 months.
However, when you’ve got a good deal of your crypto locked away in such a platform, 2 weeks is a very long time to sit around and twiddle your thumbs. In situations like this where clients have their funds frozen and they’re unable to access them, communication is key to maintaining a reputation.
In fact, the announcement and all communications from Cred are VERY carefully worded not to mention anything about the safety of its user’s funds. In its carefully worded statement, Cred states:
Cred is cooperating with law enforcement authorities to investigate the incident. However, no client personal data or account information was compromised.
At this stage, users of the platform most likely don’t care about their user data. All they want to know is if their funds are safe – something Cred appears to dance around in all of its communications.
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
Balance Sheet Irregularities
When a company says that its balance sheet doesn’t add up, the last thing that a user thinks of is their data. So, either Cred isn’t telling the world the full picture, or this is about to go from bad to worse from all Cred users. For those of you that were around in March 2019, this sounds a bit familiar to the QuadrigaCX issue, whereby the cold storage wallets were found empty – a balance sheet that doesn’t add up, if you will.
— Adam Holt (@Adam91Holt) October 28, 2020
Now, we’re not saying that this is what’s happened here, this could simply be the case of a rogue employee embezzling funds or a hacker that gained access to smart contracts and wallets and siphoned off funds. Usually when funds are missing, it doesn’t go well for the platform. It’s not often that we see stolen funds required, and there’s no mention of just how long these balance sheet irregularities have been occurring for. It could be a case that the irregularities have been there for several months now, but Cred has only just noticed.
What Can I Do?
If your crypto is all tied up in Cred, we’re sorry to say, but there’s little more that you can do other than pray to the crypto gods. Cred claims to be working with law enforcement to resolve the situation and get the platform back up and running as soon as possible. However, you’re not going to hear anything for at least 2 weeks, so don’t hold your breath.
The one saving grace is that Cred has a deal with two big insurance brokers, namely Lockton and Firestocks. So, if there has been any wrongdoing, there’s a good chance that these insurers will payout and cover your lost assets. But, there’s no telling how long this process could take. We reached out to Cred for a comment about the security and safety of users funds, but they declined to comment on the issue of user funds…
For now, it’s all eyes on the Cred Twitter page to catch their latest updates in this mystery – somebody needs to call Scooby Doo and the gang!