There are, of course, all sorts of ways one could imagine a “cryptocurrency investment platform” going belly-up. And hiring an escaped convict as its chief capital officer is certainly one of them.
[James] Alexander was convicted in December 2007 in the U.K. “for crimes related to illegal money transfers, for which he was sentenced to three years and four months in prison” in England.
“At the time of his incarceration, there was a prison break at this facility,” the report said. “Mr. Alexander has been identified by the U.K. government as a fugitive.”
Well, we—and by we, uh, we mean Cred Capital co-founder and ex-CEO Dan Schatt—are certainly relieved to have gotten to the bottom of that.
He said Mr. Alexander’s actions “were the significant contributing factor to what happened to the company and not a dereliction of duty by other senior management, including myself. The company employed highly competent security, finance, product, engineering and operations professionals, and it is highly unfortunate that a professional fraudster was able to evade the company’s background check and other security protocols.”
Uh, Dan? That’s not exactly what the court-appointed bankruptcy examiner said. In fact, it’s quite the opposite: Rather than being “the significant contributing factor” to Cred’s demise, Alexander—prison break and all—is more a symptom of the fatal disease and not the cause of death himself.
The firm’s collapse into bankruptcy was largely due to a “dereliction in corporate responsibility,” examiner Robert Stark said in his 99-page report. Failures included “chaotic and, in some instances, nonexistent diligence, accounting and compliance functions,” according to the report…. The examiner said currency was allowed to move to overseas entities without the legal setup to retrieve it when needed. Customer assets were commingled without a method for determining which assets were deposited by whom, while certain accounting information kept in spreadsheets wasn’t regularly updated, according to the report. The examiner reported the state of Cred’s records to be “disorganized and incomplete.” Cred’s problems largely stemmed from failures in corporate leadership, but Mr. Alexander’s participation in poor decision-making is a recurring theme, the report said.