ZoneBitcoin EditorialWe published an article on best lending sites (loan) but we must also remind you that even if this remains a way of passively generating interest, the history of this service has not been all rosy.
In fact, lending companies emerged in 2017 with platforms like the blockf which was the very first. It was very new at the time, remember, to be able to lend your cryptos and generate interest on them.
One company quickly stood out, it was the Cred company. We have just received the opinion of the courts which ruled on this case.
In fact, Cred had to file for bankruptcy in November 2020, leaving customers distraught. The company accused one of the founding members of the company who allegedly disappeared with more than 800 BTC.
The employees of the company were heard by the courts and it turns out that there was a line of credit granted without collateral of more than 39 million dollars to a third party, at the exclusive request of CEO Dan Scat. The employees imply by this that the CEO knew the person behind the loan. He has always refuted this accusation. He has since founded another company Earnity, according to what we can read on LinkedIn.
The investigation showed that there was above all a fraudulent transaction in which Cred had paid more than 516 BTC to a consultant and a BTC whale the same time : Winslow Carter Strong. The latter had to recommend high-net-worth clients to them.
You should know that since the bankruptcy filing, a significant amount of crypto has been recovered and returned to certain creditors, according to Coindesk. The defense party (the Cred Liquidation Trust) also affirmed that it continues its efforts to trace the transactions.
What the Cred affair taught us
In the end, the Cred company did a lot of damage to the reputation of crypto lending sites on the CeFi. However, these have proven to be solid in the long term. Indeed, apart from Cred, companies like BlockFi, Youhodler or, Nexus displays good performance. And, for good reason, the business model is solid and the lending and borrowing service is the most common service among crypto-holders.
Cred was created in 2018 under the name LibraCredit and was based in Singapore. Cred's co-founders are Dan Schatt and Lu Hua. The latter already owned a micro-lending company in China, MoKredit. They had carried out an ICO in May 2018 and raised millions of dollars to create the company. It was when the company moved to the USA that Libra changed its name to Cred.
The investigation taught us that there were transactions of this type:
- Customers deposited crypto to Cred and were to receive interest in the same crypto they deposited.
- Cred used customer deposits to lend them on MoKredit (the Chinese micro lending platform).
- MoKredi lent its funds to its own clients (with very high interest rates of up to 35%)
- Cred had sent funds to MoKredit in stablecoins. However, customers on Cred had to receive their interests in crypto. Cred would not have been able to repay them given the rise in cryptos at that time.
Apparently and in broad terms, the bankruptcy would come from there, from this wobbly operation.
What the investigation showed us is that there was also a loan for the purchase of a bond from a defaulting company and that despite everything, the consulate would still have been paid.
As of this writing, the investigation continues and is focused on the case of Carter Strong, the consultant.
The official documents of the investigation are available here posted online by the company Donlin Recano & Company, Inc.
Final word on the Cred affair
If you are worried about having funds on crypto lending sites, remember that Cred's case is very special. It is important to go to trusted companies that have been established for a long time and that do their job correctly. Today the rules are much stricter.
Cred could have been a profitable business like other platforms if the managers had not sought to engage in shenanigans among themselves. They also did not think about the rise in cryptos which can be exponential.
Today, many audits and portfolio managements are quite different. Directors have no authority to make such transfers unless it is "legal".
Fraud cases of this type are increasingly being singled out and both customers and the courts are seeking to punish these criminals.
Always stay on your guard, in any case and choose platforms installed for a long time like those we list in the article best crypto lending sites.
------
Note: No financial advice is given in this or any other article on zonebitcoin. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.
To buy cryptocurrencies (simple way):
To generate interest on your cryptocurrencies:
To secure your cryptocurrencies:
To have fun and play
- The best for Esport and sports betting: CloudBet
