Another dark chapter in the world of crypto. Former CEO Daniel Schatt and former CFO Joseph Podulka, who once led the now-bankrupt crypto lending platform Cred, have pleaded guilty to wire fraud. According to U.S. prosecutors, they misled customers about the company’s financial situation – causing losses in the tens or even hundreds of millions of dollars.
🧾 Guilty Plea in California Court: They Intentionally Misled Clients
On May 13, a California federal court confirmed that Schatt and Podulka admitted guilt as part of a plea agreement regarding bank and wire fraud. Judge William Alsup accepted their pleas, and sentencing is scheduled for August 26.
Each man faces a potential maximum sentence of 20 years in prison and a $250,000 fine, while corporate fines could reach $500,000.
Law360 reported that Schatt and Podulka deliberately shared only positive information while hiding the negative – all in an effort to convince customers to lend their fiat and digital assets to Cred.
💸 Total Customer Losses: Up to $150 Million
Cred filed for bankruptcy in November 2020, and users reportedly lost up to $150 million. Many turned to social media, asking whether their funds were still safe.
In their plea deal, the former executives admitted that their actions caused user losses between $65 and $150 million. It also emerged that Cred had substantial exposure to a Chinese company called MoKredit, which was issuing unsecured microloans to gamers in China.
🏦 Misleading Claims About Loans and Investments
Prosecutors stated that Cred’s leadership falsely claimed their loans were fully collateralized and their crypto investments were safely backed. In reality, the lending portfolio was built on unstable foundations, and when Bitcoin fell 40% in March 2020, the firm couldn’t meet its margin obligations.
The company was on the verge of insolvency, yet prosecutors say that three top executives continued recruiting new customers while downplaying the risks.
⚖️ Crypto Sector Sees a Wave of Legal Reckonings
The Cred case is just one among many. Other high-profile crypto figures have faced serious charges this year:
🔹 Alex Mashinsky, founder of the defunct Celsius platform, was sentenced to 12 years in prison on May 8 for fraud.
🔹 Travis Ford, co-founder of Wolf Capital, pleaded guilty on January 10 to conspiracy to commit fraud. He raised over $9 million from investors based on false promises of high returns.
🧠 One-Minute Summary:
Two former executives of Cred have pleaded guilty to fraud after misleading customers about the company’s financial troubles. The 2020 collapse of Cred resulted in up to $150 million in losses. Both men face up to 20 years in prison. The case is another clear sign that in the world of crypto, even top executives are no longer above the law.
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