CRED Filed For Bankruptcy After Fraud Incident: Report

CRED filed for bankruptcy after a fraud incident emerged on the platform as per the reports that we have in today’s crypto news.

The crypto lending service Cred suspended all deposits and withdrawals because of an insider fraud incident. Uphold cut all of the ties with the company and removed Cred’s CEO Dan Schatt from his board. Now, Cred filed for bankruptcy as well in just two weeks after the reports of internal fraud.
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After stopping all deposits and withdrawals due to the fraud incident, Cred filed for Chapter 11 bankruptcy in the District Court of Delaware. Cred owns at least $67 million to creditors according to the bankruptcy document.

Cred is also one of the few lending and borrowing companies like Celsius that raised money via an ICO as it managed to raise $26.4 million in 2018 ICO with its LBA token. The crypto lending and borrowing platform announced that they will halt all fund deposits and withdrawals on October 29.
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The suspended deposits and withdrawals were related to the popular service called CredEarn which allows crypto holders to deposit crypto onto the platform and earn interest. the company clarified that the systems and customer data were not compromised so the incident was reportedly a security breach or system hack.

In an email, the platform informed that the company is in the process of assessing the business impact of the fraud incident in consultation with the legal team. The support staff wrote:

 “We know this limited information is not sufficient to understand the status of your funds, we deeply regret any stress this ambiguity has put on you. Many Cred employees, family members, and partners have their funds with CredEarn as well.”

Furthermore, the platform said in an email that it experienced irregularities in the handling of specific corporate funds while an insider within the company impacted its balance sheet which led to the investigation into the possible loss of funds. Before revealing the incident, the partner and crypto wallet service Uphold ended their ties with the company as it said in a blog:

 “Uphold terminated its relationship and shut off deposits to Cred so quickly in order to protect its customers and because we were, and remain, annoyed that we were not told more about the current situation earlier.”