Cred Files For Bankruptcy
- Following irregularities in the handling of specific corporate funds by a perpetrator of fraudulent activity, crypto lender Cred has filed for bankruptcy.
- A recovery plan has been initiated with the goal of recovering user funds.
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Crypto lender Cred has just sent out an email to all users, informing them that the company has filed for Chapter 11 of the US Bankruptcy Code.
This is the first update since their October announcement about “irregularities in the handling of specific corporate funds by a perpetrator of fraudulent activity” and the law enforcement investigations that would follow. The scarcity of details since the previous announcement is now explained by a “legal obligation to remain silent”.
For clients that have been negatively impacted by the event, Cred has linked an information portal with a frequently asked questions section and up to date information, which at present does not explain the specifics of the event.
Cred was one of the leaders in crypto lending, and one of the first companies in the space to embrace government regulation by securing a California lender’s license. Founded by PayPal veterans and based in the San Francisco Bay Area, they were seen as one of the beacons of legitimacy in an industry that is still in its infancy and plagued with scams. They were seeing constant growth, managed to secure major partnerships such as a Bitcoin.com wallet integration and Visa FinTech Fast Track membership.
Not all hope is lost for users, as a comprehensive plan to recover assets has been put into place. The sale of company assets and restructuring are currently in consideration.
- A little over $13 million in altcoins were sent to crypto exchanges Binance and Coinbase in the past 24 hours, which is in accordance with a September court order.
- The court ordered a phased liquidation process, which allows the bankruptcy estate to sell $3.4 billion worth of digital assets over a certain period of time.
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- The bankrupt crypto lender said that if its reorganization plan is approved, it is ready to start repaying its customers using $2 billion in BTC and ETH by the end of the year.
- If given the green light, Celsius will restart its business under the “NewCo” brand without any funded debt, and with seed funding of up to $450 million.
- The U.S. Department of Justice has expressed its concerns over Sam Bankman-Fried’s seven expert witnesses, and requested they be barred from testifying on the case.
- The DoJ claimed most of the proposed experts lacked the necessary foundation for their opinions, making them unqualified to be an expert witness.