Unexpectedly and without warning, cryptocurrency lending platform “Cred” suspended all cryptocurrency deposits and withdrawals with a notice informing investors that an investigation is underway in cooperation with legal entities into a fraudulent incident.

Reasons for stopping the “Cred” platform from its services:

The company statement submitted indicates to source Cred suspects that the sudden stop may have been the result of an internal accident.

announced“Cred” tweeted last Wednesday that all inflows and outflows of funds will be suspended until additional updates are released “within the next two weeks.”

Read:Singer “Aikon” reveals the first integrated global city for crypto…and its digital currency will be…

We are deeply sorry for causing so much concern as we are assessing the business impact associated with a recent fraud. Cred is cooperating with law enforcement authorities to investigate the incident. However, no customer personal data or account information has been compromised.

– Cred (@ihaveCred) October 29, 2020

Then a follow-up tweet was submitted to the first tweet stating and confirming that no personal data of users or account information was hacked, and that the “Cred” platform is cooperating with legal authorities to investigate a recent fraud incident.

The Cred platform team also indicated that the fraudulent activity had affected the company’s financial position.

Their statement was as follows:

The “Cred” platform faces irregularities in dealing with the funds of a certain company by a fraudulent activity that negatively affected the balance sheet of “Cred” and led to a legal investigation into the loss of these funds.

Cred is in the process of conducting an internal accounting of its assets and assessing the impact of the incident on its existing business and in consultation with legal counsel has decided to suspend all inflows and outflows of funds related to the CredEarn Program.

Read:A start-up in Zimbabwe intends to launch a digital currency to tackle inflation in the country

Losing funds, especially when it is attributed to hacks or scams, is very common in the cryptocurrency industry.

Such incidents rarely attract the attention of legal authorities, given that the crypto market remains highly unregulated and operates largely in legal gray areas.

Founded in 2017 and headquartered in San Francisco, Cred has taken measures to strengthen relationships with government officials in promoting crypto-friendly regulations.

Last year, the company hired Mayor of Emeryville, California, Ali Medina, to lead outreach initiatives with the government.

Cred’s business is based on providing profits and interest on deposits and loans backed by crypto collateral, while taking a fee for it.

As explained on their website, Cred’s core business revolves around insurance, licensing, and providing liquidity to clients.

The website of the “Cred” platform also makes several indications that the deposit insurance offered by cryptocurrency providers is being fully secured and safeguarded.

Read:Cardano Founder (ADA): May is a big month for us

Cred also explains that credit deposits are not FDIC insured, unlike deposits in traditional US banks.

In other words, Cred advertises insurance coverage through special agreements like those with Fireblocks, but does not offer insurance similar to the US banking system.

Despite multiple claims for insurance coverage, there is no assurance or guarantee that clients’ funds are safe or that clients will be compensated if funds are actually stolen or affected.

Decentralized finance platforms and protocols suffer from several loopholes, often exploited by bad parties, which causes the protocol to stop or the deposited digital currencies are stolen, which is what we published about in many previous articles on Arab Bitcoin.

Read also:

What is the Cred decentralized platform for cryptocurrency lending?

Ripple: Over 72% of all investors believe XRP will reach $100