Users on Cred, a US based crypto banking platform are anxiously waiting to know their fate after the crypto lending platform officially filed for bankruptcy.
According to the US-based platforms statement, deposits and withdrawals were suspended after they suspected fraudulent activity in the company. The company, therefore, went on to immediately trigger the bankruptcy protection on Sunday night.
According to the news report, Cred did not notify its customers before filing for bankruptcy but released a press statement from its legal representatives. The company filing for bankruptcy means that they have accepted that they do not have enough cash to run the business anymore.
Cred promised its users an update days before filing for bankruptcy
With Cred obviously out of cash to run the business, investors and creditors alike will be aiming to fight over the remaining money as most of them might be preparing their lawsuits. Another twist to the story might be that Cred unofficially informed its investors and partners of the move before it became official, which means the firm will have its clients alone to contend with.
Their woes began on October 29, after reports of fraudulent activities were brought to the general public’s knowledge.
The blockchain banking platform then sent their users emails stating that they have decided to suspend withdrawals and deposits pending when they will find out the problem. Days later, the lending platforms sent another message to clients that stated that they were planning to introduce an update in the coming weeks, fixing the loophole.
However, clients on the platform waited for the update in preparation for the resumption activities on the platform, but the bankruptcy filing was the next update that clients saw. It is safe to say that the clients had little or no knowledge things would degenerate to this level as the platform only told them about an update.
Uphold plans to sue Cred on behalf of its customers
With administrators at the company’s helm of affairs, users will need to accustom themselves to the long silence that will follow in the coming days after the announcement. One disappointing fact is that clients on the CredEarn platform might not be able to get their cash back again as creditors will want to begin legal battles with the platform’s owners.
One such party prepared to drag Cred to court is Uphold, a crypto and fiat exchange service. According to Uphold’s recent tweet, they have opened legal proceedings again Cred in a bid to help clients on their platform recover their funds.
Uphold has been intimating its clients about the development of things on the platform as of last week as the firm said it had not received sufficient reassurance from Cred that things will return to normal. As it stands, Uphold says it is planning to sue Cred for its breach of contract, fraud, and other related crimes.
As for Cred users who still have their funds on the platform, all they can do now is hope as things have gotten out of hand for the lending platform. Cred, on its part, has admitted that it no longer has the required funds to continue operation, hence filing for bankruptcy. The remaining funds will go to a long list of creditors as administrators will be battling with sharing the money among them.
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