https://www.theblockcrypto.com/genesis/85329/investigating-the-downfall-of-cred-inc

Cred& #39;s">https://www.theblockcrypto.com/genesis/8... downfall left more questions than answers, which is, unfortunately, common in the still-nascent cryptocurrency industry. #Bitcoin https://abs.twimg.com/hashflags... draggable="false" alt="">

Luckily, there is a trail of online ‘bread crumbs’ https://abs.twimg.com/emoji/v2/... draggable="false" alt="🍞" title="Brot" aria-label="Emoji: Brot">and court filings that help paint a picture. https://abs.twimg.com/emoji/v2/... draggable="false" alt="👨‍🎨" title="Man artist" aria-label="Emoji: Man artist">

It is best to start at the inception of Libra Credit, which conducted an ICO in Q2 2018. #Ethereum

The company successfully raised $26.4M in the LBA Token offering between May 1st and May 5th, 2018. https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldsack" aria-label="Emoji: Geldsack">

Little did investors know that the $LBA Token would descend toward the abyss post-ICO. https://abs.twimg.com/emoji/v2/... draggable="false" alt="📉" title="Tabelle mit Abwärtstrend" aria-label="Emoji: Tabelle mit Abwärtstrend">https://abs.twimg.com/emoji/v2/... draggable="false" alt="📉" title="Tabelle mit Abwärtstrend" aria-label="Emoji: Tabelle mit Abwärtstrend">https://abs.twimg.com/emoji/v2/... draggable="false" alt="📉" title="Tabelle mit Abwärtstrend" aria-label="Emoji: Tabelle mit Abwärtstrend">

This is an all too familiar tale from the ICO-era of digital assets. https://abs.twimg.com/emoji/v2/... draggable="false" alt="🙄" title="Gesicht mit rollenden Augen" aria-label="Emoji: Gesicht mit rollenden Augen">

Unfortunately for the Cred community, the damage doesn’t stop with a token that lost over 96% of its value. https://abs.twimg.com/emoji/v2/... draggable="false" alt="🙁" title="Leicht stirnrunzelndes Gesicht" aria-label="Emoji: Leicht stirnrunzelndes Gesicht">

Libra Credit eventually rebranded to Cred, and Cred Inc. is the company that would later file for #bankruptcy. https://abs.twimg.com/emoji/v2/... draggable="false" alt="💀" title="Schädel" aria-label="Emoji: Schädel">

There is a lot of controversy surrounding Cred Capital, the entity at the center of the two California civil lawsuits.https://abs.twimg.com/emoji/v2/... draggable="false" alt="👩‍⚖️" title="Woman judge" aria-label="Emoji: Woman judge">

A former employee allegedly transferred $2M in #Bitcoin https://abs.twimg.com/hashflags... draggable="false" alt=""> from Cred Capital. https://abs.twimg.com/emoji/v2/... draggable="false" alt="🖥️" title="Desktop-Computer" aria-label="Emoji: Desktop-Computer"> https://blockchair.com/bitcoin/transaction/463362d41ab2686977f6f7c8bcb40ffbbfbf7fb9846558c602a29351f2cdbba0">https://blockchair.com/bitcoin/t...

Bankruptcy document #1, #Chapter11 Voluntary Petition, showed that Cred Inc. had an estimated:

https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">5,001-10,000 creditors
https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">$50,000,001-$100 million in assets
https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">$100,000,001-$500 million in liabilities

#Bitcoin https://abs.twimg.com/hashflags... draggable="false" alt=""> $ETH $BTC

Cred Inc. Pro-Forma Assets and Liabilities, revealed:

https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">$136.499M in Liabilities
https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">$67.839M in Assets

So, nearly a $69M financial hole! https://abs.twimg.com/emoji/v2/... draggable="false" alt="🕳️" title="Loch" aria-label="Emoji: Loch">

https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">$114.6M Customer crypto depositshttps://abs.twimg.com/emoji/v2/... draggable="false" alt="😰" title="Gesicht mit offenem Mund und Angstschweiß" aria-label="Emoji: Gesicht mit offenem Mund und Angstschweiß">
https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">$20.8M in collateral for customer loans

#Bitcoin https://abs.twimg.com/hashflags... draggable="false" alt=""> $BTC $ETH

However, as every good financial analyst knows, it& #39;s all about the #footnotes. https://abs.twimg.com/emoji/v2/... draggable="false" alt="🧐" title="Gesicht mit Monokel" aria-label="Emoji: Gesicht mit Monokel">

Footnote #2 reveals:

https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">$12.1M of the $14.7M or 82.5% of the cryptocurrency listed as assets are considered #illiquid.https://abs.twimg.com/emoji/v2/... draggable="false" alt="🥶" title="Cold face" aria-label="Emoji: Cold face">

https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">$964k of the illiquid cryptocurrency consists of $LBA Token.

Footnote #3 reveals:

https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">$320K or 65.4% of the frozen cryptocurrency consists of the illiquid $LBA Token ($226K) and Universal Protocol $UPT ($94K).

https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">These funds were frozen by Uphold, which had a partnership with Cred that was discontinued on 10/23

https://support.uphold.com/hc/en-us/articles/360051081112-Uphold-has-discontinued-its-relationship-with-third-party-crypto-lending-provider-Cred-">https://support.uphold.com/hc/en-us/...

Footnote #5 reveals:

https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">Cred issued $39M in loans to moKredit, an insider owned entity.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">moKredit has not paid back any of the loan principal to date and part or all of it may be uncollectible.

Footnote #10 reveals:

https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">$3M in potential assets is not shown on the financials due to the pending litigation with the former employee.

https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">Another $10M+ of stolen #Bitcoin https://abs.twimg.com/hashflags... draggable="false" alt=""> is not included either on the financials, although there are no further details on this theft. https://abs.twimg.com/emoji/v2/... draggable="false" alt="🤔" title="Denkendes Gesicht" aria-label="Emoji: Denkendes Gesicht">

Doc #16 had a graph of #Bitcoin https://abs.twimg.com/hashflags... draggable="false" alt="">’s price in USD from 3/16/20 to November 2020.

According to the declaration:

https://abs.twimg.com/emoji/v2/... draggable="false" alt="▶️" title="Nach rechts zeigendes Dreieck" aria-label="Emoji: Nach rechts zeigendes Dreieck">The $BTC price increase was unfavorable to Cred& #39;s financial position as they would owe more in Customer deposit liabilities.

@jdorman81, speculated that Cred was likely writing covered calls against the illiquid cryptocurrency, which was probably used as collateral. https://twitter.com/jdorman81/status/1326170532677476352?s=20">https://twitter.com/jdorman81...

Further, with the help of @joshua_j_lim, and bankruptcy document #11,

@jdorman81 believes that Cred was allegedly issuing free call options to employees and bearing all of the downside risks. https://twitter.com/jdorman81/status/1326237516022706176?s=20">https://twitter.com/jdorman81...

Overall, it appears that Cred’s risk management https://abs.twimg.com/emoji/v2/... draggable="false" alt="🛑" title="Stop sign" aria-label="Emoji: Stop sign"> was not up to the rigorous requirements that should be in place for a market as volatile as cryptocurrency. https://abs.twimg.com/emoji/v2/... draggable="false" alt="📈" title="Tabelle mit Aufwärtstrend" aria-label="Emoji: Tabelle mit Aufwärtstrend">https://abs.twimg.com/emoji/v2/... draggable="false" alt="📉" title="Tabelle mit Abwärtstrend" aria-label="Emoji: Tabelle mit Abwärtstrend">https://abs.twimg.com/emoji/v2/... draggable="false" alt="🎢" title="Achterbahn" aria-label="Emoji: Achterbahn">

The details are still fuzzy, and only time can provide clarity as more details become public.https://abs.twimg.com/emoji/v2/... draggable="false" alt="⏲️" title="Tischuhr" aria-label="Emoji: Tischuhr">

#Bitcoin https://abs.twimg.com/hashflags... draggable="false" alt=""> $BTC