US crypto lender, Cred files for bankruptcy

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  • Crypto lender, Cred, had filed for bankruptcy protection.
  • Recently, Cred halted fund inflows and outflows following irregularities in handling corporate funds.

The San Francisco-based cryptocurrency lender, Cred Inc., has reportedly filed for bankruptcy just less than two weeks after its announced plans to suspend inflows and outflows of funds temporarily. The bankruptcy filing has alarmed users to question whether their assets are safe, with many already seeking ways to regain their funds held with the crypto lender. 

Crypto lender enters for bankruptcy protection

Precisely on November 7, the legal team for the lending platform filed for a Chapter 11 bankruptcy protection in the District of Delaware. According to the announcement, the development was aimed at enabling the company to explore other strategic alternatives and to restructure its balance sheet. Cred hopes to maximize the value of its crypto lending platform for the creditors via the chapter 11 filing. 

In the document, the crypto lender noted assets estimated to be worth around $50 million and $100 million. Its liabilities were estimated to be around $100 and $500 million. The company also named Grant Lyon as an independent director that will spearhead the restructuring processes. The bankruptcy filing is coming a few days after the crypto lender was informed about some sort of “irregularities” in the managing certain corporate funds by a perpetrator of fraudulent activity.

Are customers’ funds safe?

Consequently, Cred announced it was temporarily suspending funds inflows and outflows. This announcement resulted in the termination of an existing partnership between Cred and Uphold, a digital currency trading platform. As a result, some Uphold users could no longer access funds in their Cred. A user asserted that he was locked out of his Bitcoin in Cred worth about $140,000 due to the development.

Most of the complaints raised by Cred users are one that demands an answer on whether their funds are actually safe.