Former Cred execs Sentenced for $140M Crypto Scam
Two former executives of collapsed crypto lender Cred LLC have been sentenced to 88 months in prison.Their actions led to meaningful losses among thousands of investors.
Cred’s ex-CEO Daniel Schatt and former CFO Joseph Podulka misled customers, resulting in losses exceeding $140 million. Judge William Alsup handed Schatt a 52-month sentence and Podulka 36 months. Both pleaded guilty in May to wire fraud conspiracy.
The issue began with Cred’s November 2020 bankruptcy filing.By today’s crypto valuations, investor losses surpass $1 billion. The scandal stems from the March 2020 COVID-19-induced crypto market crash.
This event revealed weaknesses in Cred’s business model. The company had partnered with foreign entities for financial protection, but these ties failed when Bitcoin prices plummeted. Customers were unaware of these risks.
post-crash, Cred faced unrecoverable debts from a Chinese firm. Instead of clarity, Schatt and Podulka falsely stated that operations were normal during a public Q&A. Their deceit continued until Cred’s bankruptcy.
Along with jail time, both executives face three years of supervised release and a $25,000 fine each.
