Crypto "bank" Cred files for bankruptcy after alleged multimillion fraud case

Crypto lending firm Cred filed for a voluntary Chapter 11 case in the United States Bankruptcy Court for the District of Delaware to explore strategic alternatives, including, without limitation, the restructuring of its balance sheet or the sale of its business as a going concern, in a court-supervised process, it said in a release on Saturday.

Cred claims to serve thousands of customers in over 100 countries and will now aim to use the Chapter 11 process in its attempt to maximize the value of its platform for its creditors.

The move came days after allegations of a multi-million fraud at Cred, which resulted in the firm ceasing all withdrawals, came to light last week, as CryptoSlate reported.

Cred offered a custodial solution for crypto lending, burrowing, and used its own technology to provide business and retail with credit and to allow its customers to earn a yield on more than 30 crypto and fiat currencies through its partner network.

"We arranged a call with Cred straightaway and were not sufficiently reassured by their answers, or the clarity they were able to provide. The extent of any problem at Cred was not, and is not, clear to us," an Uphold spokesperson told CryptoSlate at the time.

A spokesperson from Cred told CryptoSlate that the crypto service was still in the process of assessing the business impact of a fraud incident in consultation with its Counsel and specialists.

Despite the Chapter 11 filing, Cred maintains that all rumors about it being hacked were fabricated.

"No Cred systems, customer accounts, or customer information have been compromised," a spokesperson stated in an earlier mail to us.

Cred did not respond to CryptoSlate's queries about the bankruptcy at press time.

The firm continues to state on its homepage, "Thank goodness Cred is not a bank. We can leverage the blockchain to do everything a bank does but better."