Thursday, July 25, 2024

Cred accused of Making a Fraudulent Bitcoin Transfer to Crypto Whale While Bankrupt

Cred, a crypto trading platform with up to $500 million in liabilities, went into bankruptcy in November 2020, blaming suspected fraud by an outside investment manager entrusted with 800 BTC.

Former employees also claimed that the company was harmed by the default on a $39 million line of credit that CEO Dan Schatt issued to a Chinese lender.

However, according to recent court records filed by the trust representing Cred’s debtors, Cred paid consultant but also “crypto whale” Winslow Carter Strong over 516 bitcoin in exchange for an effectively useless bond.

An insolvent corporation cannot transfer assets in return for anything. This is a basic premise of bankruptcy law. That is exactly what happened here, according to Darren Azman, an attorney for the Cred Liquidation Trust at McDermott Will & Emery LLP, in an email to CoinDesk.

For the benefit of creditors, the Trust has indeed traced as well as retrieved a large quantity of virtual currency, and this will remain to be proactive in its efforts.

Cred’s path to bankruptcy

Cred debuted in Singapore in 2018 as Libra Credit, founded by Dan Schatt and Lu Hua. Cyber Quantum, formerly Libra Credit, launched an initial coin offering in May 2018. The funds were used to start the company, which would later become Cred after an organizational relocation to the United States.

Cred’s most well-known product was CredEarn, which allowed consumers to lend coins to Cred in exchange for repayment plus interest in the same sort of crypto as the original investment.

Cred then leased the cryptocurrency to MoKredit, Hua’s Chinese micro-lending business. The monies were then lent to MoKredit’s own customers, allegedly thousands of gamers who took out tiny loans with interest rates as high as 35%.

Cred’s transactions with MoKredit were solely in stablecoin, while the company’s debts to its CredEarn customers were in cryptocurrencies, exposing it to cryptocurrency price rises.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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