Crypto lender CRED files for bankruptcy
WILMINGTON, Del. — A leading cryptocurrency lender is requesting bankruptcy protection as a result of some alleged shady dealings. Cryptocurrency lender CRED Inc. filed for Chapter 11 bankruptcy on Saturday before the United States Bankruptcy Court in Delaware.
Last month, a cryptic email sent to users states some “irregularities” in the handling of “specific” corporate funds. The email would state the source of the issue as a “perpetrator of fraudulent activity”. Additionally, the company states that they are cooperating with law enforcement in relation to the matter.
This email was sent out to CRED consumers who staked their cryptocurrency through the Uphold platform. However, a further analysis reveals that nothing was ever pursued with law enforcement, which arose a red flag with Uphold executives.
A separate email from Uphold to their customers would announce the discontinuation of their relationship with CRED.
What the end of the CRED/Uphold partnership means
Fortunately, your crypto isn’t currently at risk of disappearing forever. This is in contrast to prior crypto lender organizations. The end of this partnership actually means a couple of things for those still doing business with CRED.
For instance, Uphold users can no longer move funds into CRED from their wallets. Also, as a result, you can no longer see your CRED balance on Uphold.
CRED still has an obligation to pay any redemptions due to clients into their Uphold wallet. This was according to Uphold’s email.
Should there be any issues throughout this process, Uphold may likely seek injunctive relief in court.
What to expect from the CRED bankruptcy
CRED stated in a press release that they have retained the services of Grant Lyon to the company’s board of directors. It adds that Lyon will be overseeing the restructuring process. Additionally, the company would secure the services of MACCO Restructuring Group to serve as a financial advisor. The advisor has the task of evaluating mergers and acquisitions, as well as other restructuring opportunities.
Uphold announced on Twitter Sunday that they intend to pursue legal action on behalf of its customers, citing a “breach of contract, fraud, and related claims.”
The financial services company would explain further on its website in a FAQ section specifically for this purpose.
The company alludes to some balance sheet issues on CRED’s end. This may have been an emerging and ongoing issue that would evolve into a tenuous position.
CoinDesk reports that CRED was making margin calls of $100 million or more on Bitcoin during the market crash in March.
Requests for comment from Uphold CEO JP Thieriot and CRED CEO Dan Schatt did not receive a response as of press time.
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Jake Leonard, a broadcast media and journalism veteran, is the editor-in-chief of Heartland Newsfeed. Leonard is also GM and program director of Heartland Newsfeed Radio Network, wrestling editor and contributing writer for Ambush Sports, a contributing writer for My Sports Vote and Midwest Sports Network, and a former contributor to Bleacher Report and Overtime Heroics. He resides at home in Nokomis, Ill. with his dog Buster.
