- The mismanagement of recently bankrupt crypto banking platform Cred has been laid bare in a Bloomberg report
- The report adds color to their bankruptcy filings and alleges heavy infighting behind the scenes
- The company has folded with $140 million owed to users
The incredible mismanagement by the Cred team that has led to the company filing for bankruptcy has been laid bare by Arca CIO Jeff Dorman following a Bloomberg article on the case. After reading through the Cred bankruptcy paperwork that was filed over the weekend, Dorman posted a timeline of the events that have led to Cred to shutter its services, losing customers their funds in the process, while Bloomberg focused on the power battle that may have caused some of the problems.
Cred Business Plan Flawed From the Start
Dorman’s summary of the mess that Cred has found itself in begins with the company lending customer funds to a loan shark at a 15% interest rate. The remaining funds were invested in “various hedge funds with seemingly zero due diligence.” These hedge funds “got killed” during the crash in March which saw Bitcoin collapse 51% in 24 hours.
Cred then went back to the same loan shark they were lending to in order to borrow back some money, but their efforts were thwarted by their Chief Capital Officer James Alexander who stole around $3 million in Bitcoin and invested the remainder in “a fraudulent hedge fund.”
This bad situation was made worse by the fact that the person responsible for this turn of events managed to keep it under wraps, meaning that when the crypt markets ripped higher in October Cred’s team and user base thought they were making bank off the price rises. Little did they know that the assets they thought were increasing in price didn’t actually exist.
Alexander Blamed For Collapse
Cred maintains that the collapse of the company, which has left them owing $140 million to users, was due to Alexander’s actions, with Bloomberg reporting boardroom infighting and an attempted coup which might have led to Alexander taking the actions he did.
All in all, it seems that there were huge problems behind the scenes with Cred, problems that have finally come to the fore in the worst way possible, with customers bearing the brunt once again.