Crypto Lender Execs Head to Prison After Fraud Conviction

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Well, well, well, looks like the house of cards came crashing down. This week, former big shots at Cred LLC, Daniel Schatt and Joseph Podulka, were handed their federal prison sentences. They pleaded guilty to a wire fraud conspiracy that’s been tied to the spectacular implosion of the crypto lender. And to no one’s surprise, they’re getting cozy with the feds. Schatt’s gonna be locked up for 52 months, while Podulka’s vacation is set for 36 months behind bars. Oh, and they’ll also get a “lovely” parting gift: three years of supervised release, and a $25,000 fine. Pocket change for crypto moguls, right? 😂

Sentences And Timeline

The dynamic duo were slapped with indictments in May 2024. After a little bit of back and forth, they pleaded guilty on May 13, 2025, admitting they pulled the wool over customers’ eyes regarding Cred’s financial health. Schatt, 55, from San Mateo, and Podulka, 53, from Palo Alto, were sentenced on August 29, 2025, by Senior US District Judge William Alsup.

Their time in the slammer starts on October 28, 2025, but not before they face a restitution hearing on October 7, 2025, to figure out how to give some of that hard-lost cash back to their customers. We can all hold our breath on that one. 😒

Daniel Schatt and Joseph Podulka are heading to prison after misleading investors about Cred’s failing crypto investments. Customer losses? Oh, just over $1 billion. No biggie.

Click here to read more: #FollowTheMoney

– IRS Criminal Investigation (@IRS_CI) September 2, 2025

So, what was Cred all about? At first, they offered loans in good old US dollars, backed by customers’ precious crypto. They also had these so-called “deposit accounts” promising yields on crypto holdings. Sounds like a dream, right? Well, it relied on a little-known partnership with a Chinese firm, which secretly took some of the customer funds to generate the interest that Cred was paying out. Add a sprinkling of third-party hedging magic, and boom, a business model was born!

How The Scheme Worked

Things got real messy real quick. Reports say that in March 2020, Bitcoin’s price took a nosedive, and Cred got exposed like a deer in headlights. Their hedging partner basically told them, “Yeah, you gotta sell your positions.” The hedging arrangement fell apart, and suddenly, the Chinese partner wasn’t going to be sending over tens of millions of dollars to save the day.

But instead of telling the truth, the management team decided to paint a rosy picture of the company. Nothing to see here, folks! Schatt even went on a public Ask Me Anything on March 18, 2020, saying that Cred was “operating normally.” Classic. 🤦‍♂️

Fast forward to November 7, 2020, and Cred files for bankruptcy. Customers? Investors? They were left with nothing but broken dreams and shattered crypto portfolios. Over 6,000 claims were filed, with $140 million in nominal losses. But thanks to the rollercoaster ride that is crypto, the actual losses are estimated to exceed $1 billion. And they say crypto is “the future.” Guess it’s not so stable after all. 😂

Legal Process And Officials’ Statements

The Justice Department had a field day with this one. Assistant US Attorneys Barbara Valliere, Patrick O’Brien, Richard Ewenstein, and Adam Reeves led the charge, with some help from Helen Yee and Maryam Beros. The FBI and IRS Criminal Investigation Oakland Field Office led the probe, and US Attorney Craig H. Missakian made it clear that this case was all about holding fraudsters accountable and protecting those poor crypto investors.

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2025-09-03 13:10