According to PANews, former executives of the bankrupt cryptocurrency lending platform Cred have admitted to wire fraud charges in a California federal court. Daniel Schatt, the former CEO, and Joseph Podulka, the former CFO, acknowledged in their plea agreements that they misled customers by selectively disclosing information, resulting in losses ranging from $65 million to $150 million. Sentencing is scheduled for August 26, with prosecutors recommending prison terms of 72 months for Schatt and 62 months for Podulka.
Following a 40% drop in Bitcoin's value in March 2020, Cred faced bankruptcy due to unmet margin requirements. Despite this, executives continued to conceal risks from new customers. Investigations revealed that the platform relied on unsecured microloans from MoKredit, contradicting its claims of a fully collateralized lending model. When Cred declared bankruptcy in November 2020, customer losses exceeded $150 million, although some assets have since been revalued at $783 million.
