Bankrupt Cred Accused of Fraudulent Transfer Bitcoin to Crypto Whale

The crypto-lending company, Cred, is being accused of a fraudulent transfer of 500 BTC to Winslow Carter Strong on the brink of bankruptcy.

Bishal Kumar Chanda3 min read
Bankrupt Cred Accused of Fraudulent Transfer Bitcoin to Crypto Whale

Cred put all the blame on an external investment manager entrusted with 800 BTC when the crypto lending platform filed for bankruptcy in November 2020, with half a billion dollars in liabilities. Former Cred employees also revealed that the company was hurt by souring a $39 million line of credit extended to a Chinese lender on behalf of CEO Dan Schatt. But the court documents filed by Cred debtor’s trust claims otherwise. It alleges that Cred fraudulently transferred 516 Bitcoins to crypto whale and consultant Winslow Carter Strong for an essentially worthless bond.

The company started in 2018 with the name Libra Credit, established by Dan Schatt and Lu Hua in Singapore. In May 2018, they changed their name to Cyber Quantum and hosted an initial coin offering (ICO). The ICO provided initial funding that helped move the organization to the US, changing its name to Cred. A unique product offered by Cred was its CredEarn, where customers could lend crypto for an annual yield. The investments were loaned to MoKredit, a Chinese micro-lending platform owned by Cred co-founder Hua. After borrowing from Cred, MoKredit then lent the funds to its customers, earning an average of 35% interest.

According to the submitted documents, Winslow Carter Strong partnered with Cred as a consultant who referred wealthy crypto investors. Cred eventually approached Strong to purchase an Income Opportunities bond worth 500 Bitcoin, which both referred to as a “bankruptcy remote entity”. Strong already knew that Cred was nearing bankruptcy, so it was wiser to buy the bonds instead of lending the company any money. However, only a few months before Cred filed for bankruptcy, it bought the bond back from strong for 516 Bitcoins. As a result, Cred left most of its investors in a lurch while only compensating one of its high-profile consultants and investor, Strong.

Cred is accused of breaking the fundamental tenet of bankruptcy, which rules against an insolvent company transferring assets in exchange for no value. However, the trust has successfully recovered a significant amount of cryptocurrency for benefitting the creditors, and it plans on being aggressive in doing so. Currently, it is investigating the payments Cred made to Strong and to what extent he was involved in business practices that led the company to bankruptcy. The trust also demanded information from Strong about the third-party investors he referred to Cred. However, Strong has decided not to comment on this matter. To save yourself from such fraudulent platforms, it is important to go through detailed reviews and platform comparisons.

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