Failed Crypto Lender Cred Blames Its Demise on Uphold Exchange in Suit

July 25, 2022 World Blockchain

The liquidation trust for cryptocurrency lender Cred sued Uphold Friday, alleging that the crypto exchange masterminded the product that ultimately caused Cred to seek bankruptcy protection in 2020.
That product, CredEarn, offered retail investors high yields until the investments Cred made with depositor money soured.

Sound familiar? Although not as high-profile, Cred’s bankruptcy case holds a number of parallels to those of Celsius and Voyager, two crypto investment platforms that filed for Chapter 11 bankruptcy protection this month. The drama surrounding Cred’s bankruptcy – who is to blame, whether and how depositors are to be repaid – may provide insight into how these more recent cases could play out.
The Cred case is also a reminder that centralized financial intermediaries have, for years, been drawing investors into the “decentralized” world of cryptocurrency through flashy marketing and seemingly too-good-to-be-true promises of high interest rates. These past few months are not the first time that the risks of what one might call CeDeFi – centralized decentralized finance – have been laid bare for consumers (and regulators) to see.

Cred’s liquidators are seeking at least $783 million in damages in the case filed in the U.S. Bankruptcy Court for the District of Delaware.