According to recent developments, a convicted financial criminal and a United Kingdom fugitive had been employed by crypto platform Cred as its chief capital officer (CCO). A court examiner’s report disclosed this information as Cred is currently under investigation in Delaware by the bankruptcy court. James Alexander, the CCO of Cred, had been in charge of raising the company’s capital and deploying it before its demise. As per the examiner’s report, Alexander had been identified as a financial fugitive by the UK authorities and he had been sentenced in December 2007 to more than three years of imprisonment.
While he was incarcerated, there had been a prison break and Alexander had managed to escape, thereby becoming a UK fugitive. The report highlighted that the poor decision-making skills of Alexander had played a major role in the bankruptcy of the cryptocurrency platform. As he was the CCO, he had been an essential cog in the firm and he certainly hadn’t been honest or diligent in his involvement and participation in the company’s finances. It was noted that his responsibilities included overseeing matters like determining how to raise capital or deploy it freely without requiring the approval of the company’s board.
However, it had all begun to go downhill for the crypto company when the price of the leading cryptocurrency Bitcoin had crashed and hit $3,500. This had been worrisome because Cred’s hedged positions weren’t protected. Dan Schatt, the chief executive at Cred, had then become concerned about how the finances had been arranged by the CCO. He wasn’t aware that Alexander had transferred about $2.3 million in Bitcoin and US dollars to his personal account. It had been alleged by Cred’s customers that the company had suffered losses of about $66 million in less than two years due to incompetence and fraud.
This didn’t come off as a surprise because the examiner’s report highlighted that Cred had done no compliance and accounting practices. The lack of standardized tracking and reporting processes, along with the blatant comingling of company and customer funds meant that the company was something to be worried about. The report said that by the time a bankruptcy filing had been made, Cred hadn’t conducted a comprehensive financial reconciliation of its accounts for nearly a year. The company had been founded in 2018 by Lu Hua and Daniel Schatt, former employees of PayPal.
The company had officially confirmed the news of its bankruptcy back in November, even though users had already become quite alarmed about its fate in October. This had been when the platform had first made the announcement of suspending its deposits and withdrawals for a duration of two weeks. Another red flag had been seen in October when Uphold, a crypto wallet provider, had ended its partnership with Cred. Only a few details were provided by Uphold about the termination and it simply said that its users would no longer be able to connect their Uphold wallet to the Cred platform.