Uphold, a cryptocurrency exchange, has denied owing $784 million to the liquidation trust of Cred, a defunct cryptocurrency investment platform.
In November 2020, the cryptocurrency lending platform Cred filed for Chapter 11 bankruptcy. In June, Uphold and two affiliates were the targets of an adversary complaint filed by Cred’s liquidation trust.
On January 11, Uphold submitted a move to dismiss all counts of the lawsuit brought on the company by Cred in June.
It asserted that Uphold promoted CredEarn with co-founders of Cred and owed the cryptocurrency loan $783.9 million.
Retail investors were drawn in by the product’s high yield promises, but Cred’s investments went bad, resulting in client losses and a bankruptcy filing in November 2020. The bankruptcy cases of Celsius Network and Voyager Digital are comparable to that of Cred.
Cred asserted in the lawsuit that Uphold collaborated with Cred’s co-founders to promote CredEarn and that Uphold’s channelled cryptocurrency investments at the time of the market’s high would have been worth more than $700 million.
Additionally, according to Law360, it claimed that Uphold “aided and abetted [cred co-founders Daniel Schatt and Lu Hua] and other key Cred officers in connection with the CredEarn programme alleged breaches of fiduciary responsibilities.”
In addition, it was claimed that Uphold was aware that Cred was “using a highly dangerous hedging technique” and that bitcoin yield earning programmes came with regulatory risks.
However, in its move to dismiss the complaint, Uphold urged the Delaware bankruptcy court to disregard Cred trust’s accusations against it, calling them “incoherent, conclusory, and conspiratorial.” Zachary Taylor of Baker & Hostetler, Uphold’s attorney, told the court that “all the trust has is unsubstantiated supposition,” before adding that “it makes no sense.”
Uphold refuted claims that it knew about Cred’s hazards and asserted that Cred was owned and run wholly independently. Additionally, it asserted that when it advertised the programme to Uphold consumers, it was not aware of CredEarn’s financial difficulties. The motion also claimed that it was unrelated to Cred’s financial difficulties.
It stated that CredEarn “was owned, managed, and operated separately from Cred, and that Cred’s failure was due to internal fraud and mismanagement.” Joseph B. Evans of McDermott Will & Emery, the lawyer for the Cred trust, stated during the hearing that “issues against the insiders regarding their collaboration with Uphold had been settled independently.”
Bankruptcy As the court was taking the matter under contemplation, Judge John T. Dorsey stated that he wanted to see that settlement agreement. A global multi-asset digital trading platform called Uphold says it has more than 10 million customers spread out over 150 different nations. It provides trading services for digital currency assets, fiat money, stocks, and precious metals.
- Uphold Exchange claims it owes millions to defunct crypto lender Cred
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