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U.S. bankruptcy judge John Dorsey has denied an emergency motion filed by 15 clients of cryptocurrency lending firm Cred Inc. to freeze the company’s crypto assets on the exchange during Chapter 11 bankruptcy proceedings.
More than a dozen of Cred’s creditors filed the emergency motion on November 23, seeking to force 21 cryptocurrency exchanges to freeze Cred’s assets on their respective platforms, including five US-based exchanges.
During a November 25 hearing, Dorsey said he could not act on the motion without evidence surrounding the state and ownership of the crypto assets in question and scolded investors for their apparent lack of effort to track down the assets:
“At this point, all I have is the obligation of the debtors to exercise their fiduciary duty to protect the property assets. […] all I can do is warn the debtors. “
However, the judge noted that issues regarding the freezing of Cred’s assets are likely to be resolved at the December 9 hearing regarding a November 18 motion of two Cred users calling for the case to be converted into procedure. of liquidation.
The November 18 filing accuses Cred of running an “unlicensed hedge fund […] fraught with fraud and deception on “Madoff” level proportions, estimating that Cred’s liquid assets are only 10% of its $ 136.5 million of liabilities.
Cred filed for bankruptcy on November 7, with Cred describing the move as an attempt “to maximize the value of its platform for its creditors.”
A November 8 statement from its co-founder and CEO Daniel Schatt claimed that former Cred chief capital officer James Alexander had fled with $ 3 million in Bitcoin belonging to his users in July of this year. Schatt also claimed that 800 Bitcoins worth over $ 10 million were stolen from the company by an impostor hired by his debtors.
The bankruptcy filing occurred less than two weeks after announcing a temporary suspension of operations.
