Former execs of crypto lender Cred cop to wire fraud
Two former executives of the bankrupt crypto lending service Cred, CEO Daniel Schatt and CFO Joseph Podulka, pleaded guilty to wire fraud. Their plea deals were accepted by District Judge William Alsup, with a sentencing hearing scheduled for August 26. Wire fraud carries potential penalties of up to 20 years in prison and substantial fines. Schatt and Podulka admitted to misleading customers by presenting selective positive information while omitting negative details, leading to customer losses between $65 million and $150 million. Cred's collapse resulted in over $150 million in losses for customers, although its assets have since increased in value. The executives misrepresented Cred's lending practices and failed to disclose reliance on a Chinese firm for unsecured loans. Following a significant drop in Bitcoin's price in March 2020, Cred faced insolvency and sought new customers while downplaying risks. Other crypto founders have also faced legal issues this year, including Alex Mashinsky of Celsius, sentenced to 12 years for fraud.
