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Cred Earn -- Is our money safe?

By Pwoseidon | Crypto Discussions | 9 Nov 2020




As you may have heard, CredEarn—a company allowing interest be earned from crypto currency; previously in partnership with Uphold—has filed for “Chapter 11 bankruptcy to maximize its assets.”

What the heck is going on? The company has been tight-lipped about the incident, having frozen all in and out flow of funds. Many are left wondering whether they will retrieve their funds.

Like many, I myself had invested in CredEarn. I was happy with the service. Although I had wondered whether the company was running a Ponzi scheme, the partnership with Uphold lent some legitimacy so I quelled my fears.


Those fears are back.


Now let’s analyze what chapter 11 bankruptcy is and attempt to determine whether we will revive our funds—in full or even partially.

Chapter 11 bankruptcy is filed when a company may not be able to pay their creditors or its debt. This is already a red flag indicating we may not receive our funds.

However, Chapter 11 bankruptcy is characterized by reorganization in the company—as Cred has indicated, “to maximize [their] assets”. The goal of this process is for the company to emerge with greater equity and less debt.


One possibility (scenario 1) could be that Cred may earn the right to cancel contracts they have with users; thus potentially allowing Cred users to retrieve their funds (hopefully in full) without being paid interest in the investment programs they had subscribed to. This is the best case scenario.

If sufficient company reorganization is reached, it’s possible for Cred to wiggle their way out by finding new investors and offering them more favourable terms than current users.


In the scenario (2) where Cred’s debts exceed assets and Cred can’t pay off its debts, then the company’s creditors may be left with control over the company while the owners lose all control and rights.


As of writing this, I am unsure whether Cred Users are the creditors since we provide funds, but this seems to be the likely case.

In both scenarios, it would appear the Cred users are facing favourable terms, however it remains to be known whether users’ funds are safe.


Let’s hope for the best and continue to speculate as more information is made available.



Thank you for reading,


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