Nick Chong · 12 hours ago · 2 min read
Crypto lending app Cred purged its services earlier this week amidst allegations of fraud coming to light. The service allows users to earn a yield on crypto assets based on the amount of collateral they post, but now faces a tough battle to regain the public’s trust and bring its service back to speed.
The issue was first identified on October 29 after Cred noted the company was investigating a “recent fraudulent incident” and liaising with law enforcement authorities. At the time, it suspended all deposits/withdrawals with immediate effect.
We deeply regret causing so much concern as we assess the business impact connected with a recent fraudulent incident. Cred is cooperating with law enforcement authorities to investigate the incident. However, no client personal data or account information was compromised.
— Cred (@ihaveCred) October 29, 2020
As a reaction to the malicious development, US FinTech player and crypto exchange Uphold terminated its services with Uphold until further notice, CryptoSlate learned in a note. The platform allows users to link their wallets to third-party apps such as Cred to enable the purchase and sale of cryptocurrencies.
“We arranged a call with Cred straightaway and were not sufficiently reassured by their answers, or the clarity they were able to provide. The extent of any problem at Cred was not, and is not, clear to us,” an Uphold spokesperson told CryptoSlate.
“We acted immediately out of an abundance of caution to protect our customers by closing down all outgoing links into Cred and ending our relationship with the company. We can’t say more because we don’t have the information. Cred is investigating the matter.”
Uphold is one of many wallets to offer an integration with Cred. However, it was the first to restrict further transfers to Cred and terminate the relationship when it learned of the issue.
A spokesperson from Cred told CryptoSlate that the crypto service was still in the process of assessing the business impact of a fraud incident in consultation with its Counsel and specialists.
“We are working hard to assess the situation and expect to share more next week. For now, all inflows and outflows of funds will remain temporarily suspended for the November 1 program,” they stated.
Meanwhile, Cred told CryptoSlate that concerns and rumors about Cred being hacked were fabricated. “No Cred systems, customer accounts, or customer information have been compromised,” a spokesperson stated in a mail to us.
Antoni Trenchev, Managing Partner at Nexo, had the following to say about the Cred suspension of withdrawals:
“Cred’s loss of funds is a reminder that crypto lenders are responsible for the security and sound reputation that digital banking needs to progress. This situation is regrettable for those affected, but it is also yet another wake-up call for players in the industry who are not taking the necessary precautions to guarantee the safety of their clients’ funds and thereby bring greater scrutiny to our still-nascent industry.”
Posted In: Lending