On October 29 this year, Crypto lending platform Cred suspended inflows and outflows of funds because of an incident that resulted in users being unable to withdraw or deposit. At first, the crypto lender didn’t disclose any details about the investigation, just that they are working with law enforcement authorities.
The company took to Twitter to share the update regarding the suspension, saying, ‘Unfortunately, we are unable to comment further at this time but we will undertake to provide an update within the next 2 weeks. During this period, all inflows and outflows of funds have been suspended.’
Crypto users have expressed their frustration for Cred’s lack of transparency regarding the current situation. A few days before Cred officially suspended their services, crypto wallet and trading platform Uphold ended their terms with the crypto lender.
A spokesperson of Uphold stated that: ‘We arranged a call with Cred straightaway and were not sufficiently reassured by their answers, or the clarity they were able to provide. The extent of any problem at Cred was not, and is not, clear to us.’
‘We acted immediately out of an abundance of caution to protect our customers by closing down all outgoing links into Cred and ending our relationship with the company. We can’t say more because we don’t have the information. Cred is investigating the matter,’ they added.
By November 7, the crypto lending platform had officially filed for bankruptcy in the District of Delaware following the fraudulent incident. The company has estimated assets ranging from US$50 million to US$100 million and liabilities between US$100 million and US$500 million.
Following the file for bankruptcy, customers of Cred questioned the security of the funds they invested. They sent messages and even tagged Cred in a series of Tweets to determine if there’s a chance that they’ll get their money back. Uphold now wants to sue the crypto lending platform.
‘[We] plan to sue Cred LLC, the corporate entity, its affiliates, as well as Cred’s founders for fraud, breach of contract, and reputational damage. Any proceeds Uphold receives from these actions will first be distributed among Uphold customers who have lost money at Cred. Uphold will fund the costs of this litigation.’