Cred Crypto Lender Froze All Funds, Suspecting Internal Fraud

CRED Crypto lender froze all of its funds and cooperation with law enforcement agencies after a “fraudulent incident” as we are reading more in today’s cryptocurrency news.

The Cred crypto lender announced last night that the platform froze all funds as it investigates a fraudulent incident. Cred advertises insurance for customer deposits but still has to confirm the customer funds that were impacted or will be returned. The company recently clarified that the incident did not involve a hack but the “mishandling” of the specific corporate funds.”

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

The lending service has unexpectedly halted all customer deposits and withdrawals and left users with a cryptic messages about a “fraudulent incident” and ongoing cooperation with law enforcement. The company statements suggest that CRED suspects the loss could have been an inside job. Cred announced on Twitter that all inflows and outflows of funds will be suspended until additional updates are released in the next two weeks. A short follow-up gave assurances that no client’s personal data or information was compromised and that the platform was cooperating with law enforcement authorities to investigate a recent fraudulent incident that could have been an inside job.

In an exchange with the support account AskCred, the Cred Team indicated that the fraudulent activity impacted the company’s financial position as the company staff said:

 “Cred has experienced irregularities in the handling of specific corporate funds by a perpetrator of fraudulent activity that has negatively impacted Cred’s balance sheet and precipitated a law enforcement investigation into the loss of these funds.

Cred is in the process of carrying out an internal accounting of its assets and assessing the impact of the incident on its current business and in consultation with legal counsel has determined to temporarily suspend all inflows and outflows of funds relating to the CredEarn program.”

Loss of funds, mainly when they are attributed to hacks or scams is a very common incident in the crypto sector. Usually, these incidents attract the attention of law enforcement because crypto is still regulated very loosely and operates in legal grey areas. cRed was founded in 2017 in San Franciso. The platform took measures to bolster relationships with the government officials and to enhance the crypto-friendly regulations. The company hired Ally Medina who is the mayor of Emeryville, California to lead the government outreach initiatives.