United States-based cryptocurrency lending service Cred filed for Chapter 11 bankruptcy protection on Saturday, leaving many customers searching for solutions to get their funds.
According to court documents, the legal team for Cred CEO Daniel Schatt filed bankruptcy papers for the company in the District of Delaware on Nov. 7.
Cred listed its estimated assets at between $50-100 million and its estimated liabilities between $100-500 million.
In an official statement, the company said it had filed for Chapter 11 in an attempt “to maximize the value of its platform for its creditors.”
The bankruptcy filing comes following an Oct. 28 announcement the platform would be suspending fund inflows and outflows for two weeks. Cred stated on Twitter that the suspension was not due to any criminal investigation, but the platform was working with authorities “to help investigate irregularities in the handling of specific corporate funds by a perpetrator,” citing a “fraudulent incident” as the cause.
Shortly before the announcement, cryptocurrency wallet and trading platform Uphold terminated its partnership with Cred. Cointelegraph reported that at least one Uphold user had been having technical problems with the platform’s CredEarn program allegedly caused by Cred. Following the dissolution of the Uphold partnership, the user claimed that he had roughly $140,000 in Bitcoin (BTC) and other assets locked in his Cred account.
Cred has said none of its systems, customer accounts, or customer information were compromised in the “fraudulent incident,” but has not issued an update on Twitter or purportedly by email to its users since Oct. 30 regarding assets accessed using the platform.
“We just want to know that our funds are safe,” said Twitter user Zijin Huang. “Please address this on your next update, not an announcement to the next announcement.”
The platform has now updated its website to include information on the Chapter 11 filing, but many users did not get the message. Crypto Twitter user AwsomeNada claimed to have 7,250 XRP — roughly $1,829 at the time of publication — deposited on their last transaction before fund inflows and outflows were suspended.
“I want to know how this can be resolved,” said AwsomeNada. “I need my money back today.”
Users made similar claims of losing access to “thousands of XRP” and other assets without hearing if their funds were safe during the bankruptcy process.
Our our funds we invested with Cred still safe with this chapter 11 bankruptcy?
— Matthew Longest (@MattLongest6) November 8, 2020
While both fund inflows and outflows will seemingly remain inaccessible as Cred goes through the Chapter 11 process, other exchanges have also been giving users reason to see the meaning behind “not your keys, not your coins.” Digital asset withdrawals have remained closed on crypto exchange OKEx since Oct. 16 amid rumors the police have detained its founder.
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