Two former executives of the bankrupt crypto lending service Cred, Daniel Schatt (CEO) and Joseph Podulka (CFO), have pleaded guilty to wire fraud related to the company’s collapse. The plea deals, according to May 13, were filed in a California District Court, with Judge William Alsup setting a sentencing date for August 26.
Wire fraud charges can result in up to 20 years in jail, as well as penalties of up to $250,000 for individuals and $500,000 for companies. Schatt and Podulka acknowledged deceiving consumers by selectively giving favorable information while concealing bad news in order to persuade them to lend Cred US and digital currency.
Source: PACER
As part of the accord, Schatt and Podulka admitted that their activities caused losses ranging from $65 million to $150 million for clients, with losses topping $150 million when Cred declared bankruptcy. However, assets have been claimed to be worth more than $783 million.
Both executives were facing 13 counts linked to wire fraud and money laundering, and James Alexander, a former Cred executive, is also facing similar allegations.
The guilty admissions constitute a watershed point in the continuing investigation of the cryptocurrency industry’s operations, underlining the importance of openness and accountability. Schatt and Podulka will be sentenced on August 26, and each could face up to 20 years in jail. The case underscores the risks associated with unregulated financial products and the importance of due diligence by investors.
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