Victor Ugochukwu · Dec 14, 2020 . 5min read
Consumer funds safety at stake as Cred files for bankruptcy
Crypto lending platform Cred files for Chapter 11 bankruptcy after the insider fraud incident, consumers demand answers about the safety of their funds.
By Komal Joshi · Nov 10, 2020 . 5min read
Cred, a cryptocurrency lending service, filed for Chapter 11 bankruptcy protection on November 7th. The movement has left many of the US-based platform users to demand whether or not the individual funds in the platform are secure. The filing originates just over a week after an October 28th statement that the platform would suspend withdrawals and deposits of funds on the platform for over two weeks.
Recently, Cred stated that it was suspending fund deposits and withdrawals. The suspension of deposits and withdrawals had a connection with the company’s famous service CredEarn. The company explained that there had been no compromise in its systems and consumer data. As such, the event was reportedly not a security breach or system hack.
Uphold concluded its partnership with Cred before it suspended services.
Moreover, prior to the suspension of withdrawals and deposits, crypto wallet, and trading service Uphold terminated its collaboration with Cred without any proper explanation. The post-termination of partnership reports surfaced users having problems obtaining funds in their Cred account. Moreover, one user claims to have approximately $140,000 worth of Bitcoin and other assets fastened in their Cred account.
However, withdrawals and deposits from the platform have been suspended for longer than a week. Cred’s Twitter account has not come up with any update since October 30th. Additionally, Cred’s main website includes data about the bankruptcy; plenty of users are still unsure whether or not they will be capable of accessing their crypto–or when. Various users took to Twitter to express their problems. A crypto Twitter user states that he requires his money back today. He further claims to have 7,250 XRP in his Cred account before the suspension of fund inflows and outflows.
Nevertheless, this is not the only scenario in which consumer funds on a crypto platform are at stake. Following the arrest of its founder, OKEx suspended consumer deposits and withdrawals of funds on October 16. Earlier, OKEx had declared that some of the custodians of the exchange multi-sig wallet (private keys) are interacting with law enforcement investigations.
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