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Exchange Cred declares bankruptcy

Photo of: Joseph Stone
by Joseph Stone

The cryptocurrency lender Cred declares itself bankrupt due to fraud. Customers no longer have access to their funds.

The setbacks of certain players in the crypto sphere accumulate. OKEx is thus always at a standstill, blocking withdrawals. BitMEX is the target of legal action by the American authorities. It is now Cred’s turn to go through some turbulence.

The crypto loan service has officially declared bankruptcy. In concrete terms, Cred is now under the protection of Chapter 11 in the United States. For its customers, this means the end of access to the cryptocurrency placed with the company.

Cred reports having assets of $50 million to $100 million and liabilities of $100 million to $500 million. By declaring bankruptcy, crypto loan service explains that it is trying to “maximize the value of its platform for its creditors.

The bankruptcy follows a previous announcement on October 28. At that time, Cred stated that it would suspend cash inflows and outflows for a period of two weeks. This phase will finally be extended.

The company explains that it is suffering the consequences of a fraud. Cred is working with the authorities “to help investigate irregularities in the management of specific company funds by an author”.

Shortly before, as Cointelegraph reported, the Uphold trading platform ended its partnership with Cred. Despite the formalization of a fraudulent incident on its service, Cred ensures that its clients’ funds remain safe.

While they are safe, the assets are no longer available to their owners. On its website, Cred now states that it is in a situation of bankruptcy. However, this procedure does not prevent a future restart of the activity.

However, this will only be possible after a restructuring and the possible contribution of new capital, for example through a buyer. In any case, the case once again highlights the risks arising from the use of a custodial service.

The users of one of the main exchanges, OKEx, are in a similar situation. Since October 16, withdrawals of cryptocurrency have been impossible. Its founder is officially participating in an investigation by the Chinese police.