Crypto Lender Cred Files for Bankruptcy After Losing Funds in Fraud
In October, the lender published a cryptic letter saying it has experienced “irregularities” in the handling of “specific” corporate funds by a “perpetrator of fraudulent activity.”
Crypto lender Cred Inc. filed for Chapter 11 bankruptcy protection in Delaware on Saturday.
- In its filing, Cred listed estimated assets of between $50 million and $100 million and liabilities between $100 million and $500 million.
- In an emailed press release, Cred said Grant Lyon has been named to the company's board to oversee the restructuring process. It has also hired MACCO Restructuring Group as financial adviser to evaluate M&A and other restructuring opportunities.
- In October, the lender published a cryptic letter saying it has experienced "irregularities" in the handling of "specific" corporate funds by a "perpetrator of fraudulent activity." In response, Cred said it had been advised by legal counsel to temporarily suspend inflows and outflows of funds relating to its CredEarn program.
- At the same time, wallet and trading platform Uphold told customers it had "decided to discontinue its relationship with Cred."
- Additionally, Uphold announced via a tweet on Sunday its intention to pursue legal reparations on behalf of its customers citing a "breach of contract, fraud and related claims."
- Cred may have already been in a tenuous position as several crypto lenders struggled to weather the bitcoin crash in March, with some making margin calls of $100 million or more.
- Cred CEO Dan Schatt did not immediately respond to a request for comment.
UPDATE (Nov. 8, 20:11 UTC): Adds assets/liabilities, new board member and hiring of restructuring firm.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.