Uphold exchange denies owing millions to failed crypto lender Cred
Crypto exchange Uphold has denied owing around $784 million to the liquidation trust of bankrupt crypto investment platform Cred.
At a court hearing on Jan. 11, Uphold filed a motion to dismiss all counts in the suit served against the firm by Cred in June 2022.
Cred was a crypto lending service that filed chapter 11 bankruptcy in November 2020. In June 2022, Cred’s liquidation trust filed an adversary complaint against Uphold and two affiliates.
It claimed that Uphold worked with Cred co-founders to promote CredEarn and claimed that it owes the crypto lender $783.9 million.
According to the lawsuit, Cred claimed that Uphold worked with Cred's co-founders to promote CredEarn, claiming that crypto investments channeled from Uphold at the time of the market peak would have been worth upwards of $700 million.
The product promised high yields which lured in retail investors, however, Cred’s investments turned sour leading to customer losses and a bankruptcy filing in November 2020. Cred’s bankruptcy case has similarities to those of Celsius Network and Voyager Digital.
Furthermore, it alleged that Uphold “aided and abetted alleged breaches of fiduciary duties by Cred co-founders Daniel Schatt and Lu Hua and other key Cred officers in connection with the CredEarn program,” according to Law360.
The suit also alleged that Uphold was aware that Cred was “implementing a highly risky hedging strategy and that there was regulatory risk associated with cryptocurrency yield earning programs.”
However, in its motion to dismiss the case, Uphold called Cred trust’s allegations against it “incoherent, conclusory, and conspiratorial,” urging the Delaware bankruptcy court to reject them.
Uphold’s attorney, Zachary Taylor of Baker & Hostetler,
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