Decentralized lending platform Cred is working with the law enforcement to conduct a probe into accounting irregularities. The firm stands ready to support the investigation into the “loss of funds,” which may negatively impact Cred’s balance sheet. According to an emailed statement, Cred has been directed by legal authorities to temporary suspend fund inflows and outflows under the CredEarn program. Further information will be updated, “within the next two weeks.” Information provided by the same source said that trading platform Uphold announced its decision, "to discontinue its relationship with Cred," meaning customers can no longer pass their funds from their Uphold wallet to Cred or access a Cred balance on Uphold.
Why it matters:Decentralized finance, even on the fiat side of the market, is still a very new sector. While there are safeguards in place for any financial institution, without an immutable record of the transaction history, many different kinds of problems are possible. While Cred isn't a DeFi platform in the truest sense of the term, it has been a leader is pushing the boundaries of peer-to-peer lending, and has generated what appeared to be great returns for many investors. As the Wirecard scandal demonstrated in graphic detail, success doesn't mean an honest business model, and fraud is likely to be discovered sooner or later.