Cred, the digital currency service provider that gave interest on digital currency deposits and let individuals take out digital currency-collateralized loans, has filed for chapter 11 bankruptcy. Cred filed for bankruptcy on November 7th and allegedly has between $50-$100 million in assets but $100-$500 million in liabilities.\u00a0 How did Cred go bankrupt? In hindsight, there is evidence that Cred was having financial trouble that could lead to bankruptcy. On October 28, Cred announced that its balance sheet had been \u201cnegatively impacted\u201d by a \u201cperpetrator of fraudulent activity.\u201d The following day, Cred suspended customer's deposits and withdrawals to its interest-bearing service CredEarn. Subsequently, digital currency trading platform Uphold announced that it had \u201cdecided to discontinue its relationship with Cred;\u201d and in a blog post, Uphold went on to say that,\u00a0 Cred appears to have had the extraordinary bad luck of employing an alleged fraudster, who is accused of stealing money and making bad investments. We do not know the extent of any damage this may have caused. This is obviously very upsetting for Cred\u2019s customers as well as the many good and talented people who work at the firm. As far as we know, the matter relates to one former employee. This indicates that Uphold believes that the fraudulent activity that took place at Cred was an inside job. On November 8th, Uphold announced that it \u201cplans to sue Cred LLC, the corporate entity, its affiliates, as well as Cred\u2019s founders for fraud, breach of contract, and reputational damage. Any proceeds Uphold receives from these actions will first be distributed among Uphold customers who have lost money at Cred. Uphold will fund the costs of this litigation.\u201d What\u2019s next for Cred? Cred has hired MACCO Restructuring Group as a financial advisor to assist the company in assessing merger and acquisition opportunities as well as restructuring opportunities.