As a reaction to an article released by CoinTelegraph.com, INLOCK is absolutely distancing itself from the company called CRED. We have not known them before, neither had any business connection to them.
INLOCK thinks it is important to comment on this story since crypto lending is an industry based on trust and giving information to our clients is the most important for us.
The article can be found here: https://cointelegraph.com/news/cred-customers-demand-answers-after-platform-files-for-bankruptcy
The same article in Hungarian language: https://www.kriptoworld.hu/a-cred-felhasznaloi-valaszokat-varnak-a-platform-csodje-utan/?utm_source=mailpoet&utm_medium=email&utm_campaign=uj-hirek-a-kriptoworldon_3
The opinion of Csaba Csabai, CEO of INLOCK is the following in connection with this topic:
„When a lending platform writes about itself that they possess „Soc 2 type II” certificate and insurance, a lot of them think, under any circumstances, it bears a relation to the deposits of their clients. Even though logically, it could be actually true for only a smaller part of those deposits, which the given platform uses as a liquidity pool for the daily operation. Moreover, it is important to see that the insurance concerns cybercrime, which is VERY important, yet it has nothing to do with the accidental damages of procedures.
The management of INLOCK opposed against SOC 2 Type II institutional security and related insurance on purpose a long ago. This spring eventually the team went with it, because a lot of people saw not having these certificates as a disadvantage. This is the reason why we joined Fireblocks.
In fact, only two aspects exist on this market which is actually comprehensible as the protection of clients:
1️⃣ Having an own pulverized reserve fund. This is currently 3 million USD at us. This is our money, (notedly our investors’), which we treat as a reserve fund. Meanwhile, it is important to mention that the fund is also externalized to our partners. This reserve fund is NOT stored in ILK tokens, in contrast with certain competitors, who have their own reserve fund exchanged to their tokens, which will exactly have 0 value when it’s the time of salvage.
2️⃣ Business strategy and its consequent compliance. Namely, more than 70% of the externalized loans are overinsured at us, and only the rest of 30% is the so-called unsecured loans, but those are only externalized for partners who cover the entire market and have a really good base to demand unsecured loans. All of these companies are registered in the USA and went through a serious due diligence process. It is important to note that based on our strategy, the amount of unsecured loans can never overstep the amount of our own reserve fund.
Another serious point to see the whole picture:
The overinsured loans mean any kind of security if, and only if the given company is able to liquidate them. The DeFi market did not have any big crisis so far on the basis of which DeFi tokens can prove they are actually able to do that. The exception is MakerDAO, which of course experienced the crisis of March 2020. They came a cropper with it and made a deficit of 6 million dollars. On the same day, INLOCK could liquidate 80% of all the ongoing covers. It was really painful to see when more the three-quarters of the ongoing loans disappeared from the system in just a couple of hours.”
