The United States Bankruptcy Judge, John Dorsey has denied an urgency motion filed by 15 clients of crypto lending company Cred Inc. to freeze the company’s crypto assets on exchanges in the middle of your bankruptcy proceedings under Chapter 11.
More than a dozen Cred creditors filed the urgency motion on Nov. 23 to force 21 crypto exchanges to freeze the assets held by Cred on their respective platforms., including five US-based exchanges.
During a November 25 hearing, Dorsey claimed he could not respond to the request without evidence of the status and ownership of the crypto-assets in question, accusing investors of apparently making no effort to get the assets follow:
“At this point, I have only debtors’ obligation to exercise their fiduciary duty to protect the property of the estate. […] I can only warn the debtors. “
However, the judge noted that issues related to the freezing of Cred’s assets are likely to be discussed during the December 9 hearing regarding a request dated November 18 by two Cred users requesting the conversion of the case. in liquidation proceedings.
The November 18 filing accuses Cred of operating an “unlicensed hedge fund” […] plagued by fraud and deception in ‘Madoff’ level proportions “It is estimated that Cred’s cash equals only 10% of its debt of $ 136.5 million.
Cred filed for bankruptcy on Nov. 7, and Cred described the move as an attempt to “maximize the value of its platform to its creditors”.
A Nov. 8 statement by Co-Founder and CEO Daniel Schatt alleged that Cred’s former chief equity officer James Alexander got away with $ 3 million Bitcoin owned by its users in July of this year . Schatt also said that a scammer hired by his debtors stole 800 bitcoin worth more than $ 10 million from the company.
The bankruptcy filing took place less than two weeks after the announcement of a temporary cessation of operations.