While decentralized finance products continue to rise in popularity, one of the hottest industries is peer-to-peer lending. With more power in the hands of the consumer, lending crypto to earn money has become a favorite way to earn passive income. However, cryptocurrency comes along every now and then to remind everyone that there is risk involved whenever you invest with cryptocurrency and nothing is free.
The latest victim of this truth is consumers that participated in the lending platform Cred. Cred was established to help users leverage their cryptocurrency assets and lend them out to earn money. In addition, others can come to Cred seeking funding and loans through the platform. The arrangement is supposed to benefit everyone involved, but Cred recently filed bankruptcy.
Cred has filed for bankruptcy on the grounds that it has far greater debt, perhaps 10x more debt, than it has assets. It has been instructed by legal counsel to declare bankruptcy and stall the flow of funds from in or out of the CredEarn program. They say that this is due to potentially fraudulent activities that have been taking place.
Since then, many trading platforms have decided to end their relationship with Cred, and class-action lawsuits have begun to pile up. Cred appears to be eyeing up a restructure that would allow them to stay in business, but it’s clear so far that they don’t even know much about the potential breach if one exists.
Cred has filed for Chapter 11 bankruptcy in the state of Delaware, and legal proceedings are ongoing.
