Cred sued Uphold in June 2022 over a jointly promoted crypto yield product called CredEarn.
Crypto exchange Uphold denied that it is about $ 784 million and the trust of the compensation of the crypto investment platform is damaged.
In a court case on Jan. 11, Uphold filed a motion to dismiss all allegations in Cred’s June 2022 lawsuit against the company.
Cred is a crypto lending service that filed for Chapter 11 bankruptcy in November 2020. In June 2022, Cred’s winding-up trust filed a lawsuit against Uphold and two partners.
He said Uphold worked with Cred officials to promote CredEarn and said it owed the crypto lender $783.9 million. According to the lawsuit, Cred said that Uphold worked with Cred’s partners to promote CredEarn, saying that the crypto investment from Uphold at the time of the market price will be more than $ 700 million.
The product promised high returns that appealed to retail investors, however, Cred’s investment backfired, leading to customer losses and a bankruptcy filing in November 2020. Cred’s bankruptcy case bears similarities to those of Celsius Network and Voyager Digital.
Additionally, he alleged that Uphold “aiding and abetting alleged breaches of fiduciary duties by Cred co-founders Daniel Schatt and Lu Hua and other key Cred officials under the CredEarn program,” according to Law360. The lawsuit alleges that Uphold knew that Cred was “conducting a risky hedge plan and that there were regulatory risks associated with the cryptocurrency seed program.”
However, in its motion to overturn the judgment, Uphold called the Cred Trust’s allegations against it “inconsistent, convoluted and contrived”, asking the Delaware court to drive them away.
Uphold’s lawyer, Zachary Taylor of Baker & Hostetler, told the court that “unlawful mergers are all trusts have”, before adding “it makes no sense”.
Uphold has denied the allegations that it was aware of the dangers to Cred, saying that Cred was completely independent and had done his job. He also said he was not aware of CredEarn’s financial problems when he promoted the product to support clients.
The petition also said it had nothing to do with Cred’s non-payment. CredEarn “is independently owned, managed and operated by Cred, but internal fraud and mismanagement have brought Cred down,” it read.
During the hearing, Cred Trust attorney Joseph B. Evans of McDermott Will & Emery said that “The charges against the actors related to their collaboration with Uphold have been decided separately.”
Bankruptcy Judge John T. Dorsey said he wanted to see the settlement because the court took the matter under advisement. Uphold is a global multi-asset digital trading platform that claims to have more than 10 million users in 150 countries. It offers trading services for crypto assets, fiat currencies, stocks, and precious metals.
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