Cases involving San Francisco-based cryptocurrency lending company Cred LLC Submit It was resolved in a sentence that its founder and CFO will carry out spending time in prison for bankruptcy in November 2020.
Executives Daniel Shatt (former CEO) and Joseph Podulka (former CFO) are being punished for their role in a wire fraud conspiracy that led to a customer loss of around $1 billion, according to the current coin valuation.
How many CEOs and CFOs do Cred do?
According to the U.S. Lawyer’s office for the Northern District of California, Daniel Schatt, the company’s co-founder and CEO, was sentenced to 36 months, while Joseph Podulca, the company’s chief FO, was sentenced to 36 months.
In addition to prison time, Shatt and Podulka also received a three-year supervised release and a $25,000 fine.
Schatt and Podulka, 53, 55, pleaded guilty in May to telegraph a conspiracy to fraud and were charged last year with former capital chief James Alexander.
US lawyer Craig Misakian said in a statement Friday that the criminal conspiracy caused significant damage to Cred’s clients.
Cred’s business has provided loans to its customers primarily by using Crypto as collateral and accepting cryptocurrency deposits in exchange for interest. That was the part that the customers knew.
A part that many of them didn’t know was that the business also relied on its relationship with a Chinese company founded by one of the co-founders of CRED to generate interest rates.
“Under this arrangement, Cred will lend a percentage of Cred’s client funds to Chinese companies, which will provide Chinese gamers with a short-term, high profit margin, generating profits that will be repaid to CRED.”
The business also relied on hedging strategies and used third-party companies to protect credits from overexposure in the crypto market.
The judiciary agreement traces the plot in March 2020, as the start of the Covid-19 pandemic and Bitcoin prices have since stagnated.
Prosecutors said he heard from his heading partner that it was underwater and that all trading positions would need to be settled. The Chinese company also informed the belief that it could not repay the tens of millions of dollars its executives have hidden from customers and investors.
According to prosecutors, Shutt said that during the public “Ask Management Anything” session on March 18, 2020, Cred said that he was “operating properly.”
“Daniel Shatt and Joseph Podulka have organized a plan to deceive both investors and clients from their hard-earned funds in order to expand their failed business,” said Matt Cobo’s FBI special agent.
After the company’s bankruptcy filing, clients and investors filed more than 6,000 claims totaling over $140 million, based on their August 2025 valuation.
The return hearing is scheduled for October 7th, and the pair will begin their sentence on October 28th.
Regulators are still going after fraud and mismanagement
Shat and Podurka are not the only crypto founders that have faced legal consequences this year.
The SEC has now rejected some well-known cases involving several giants of the industry. However, US lawyer Craig Misakian promised that “fraud targeting cryptocurrency investors and clients will not be tolerated, and fraudsters will be held responsible for their actions.”
Besides Schatt and Podulka, other prominent crypto executives facing legal prosecution include Alex Mashinsky, founder and former CEO of bankruptcy Crypto Lending Platform celsius, who was sentenced to 12 years in prison for fraud on May 8th.
There is also Wolf Capital co-founder and head trader Travisford. He pleaded guilty on January 10th to conspiracy for fraud. Do Kwon of Terraform Labs has pleaded guilty to fraud, while the tormented Sam Bankman-Fried has been sentenced to 25 years in prison.
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