Online cryptocurrency platform Cred Inc. filed for bankruptcy protection, blaming alleged mismanagement and a bitcoin thief while owing clients and customers $140 million, WSJ Pro Bankruptcy reported. The company, which made money investing cryptocurrencies it held for customers, sought chapter 11 in the wake of a legal tussle between co-founder, Chief Executive and former PayPal official Daniel Schatt and former executive James Alexander, who departed from Cred on bad terms in June. Cred has more than 6,000 creditors, most of whom are clients and customers with cryptocurrency positions, according to a filing in U.S. Bankruptcy Court in Wilmington, Del. Customer accounts have been frozen, said a person familiar with the matter. Some customers closed their accounts as word got around about the company’s troubles, including the litigation between the company, Schatt and Alexander as well as a $10 million bitcoin theft from a fraudulent investment scheme run by an impostor, Cred said in court papers. Customers transferred their cryptocurrency, often through a loan agreement, to Cred, which also makes loans. The closely held company, which has about 20 full-time employees, is half-owned by Schatt of San Mateo, Calif.
