Daniel Schatt and Joseph Podulka, former executives of defunct crypto lending platform Cred, recently pleaded guilty to committing wire fraud. The latest development unfolded in the United States District Court for the Northern District of California.
The Rise and Fall of Cred
San Francisco-based Cred was founded in 2018 and marketed itself as a “licensed lender with comprehensive insurance.” It offered high-yield crypto-backed loans and interest-bearing deposit accounts, promising customers security and attractive returns. Despite its claims, Cred internally routed about 80% of customer assets into China-based MoKredit.
In March 2020, Bitcoin’s price plunged by 40% within 24 hours, resulting in Cred facing massive margin calls and liquidity shortfalls. However, Schatt and Podulka continued soliciting deposits while downplaying solvency concerns. Later that year, it filed for Chapter 11 bankruptcy, with over 6,000 customer claims totaling about $150 million.
Former Cred Execs Plead Guilty
Fast-forward to May 13, 2025, Schatt and Podulka pleaded guilty to one count of conspiracy to commit wire fraud before Judge William Alsup. They acknowledged they knowingly misled investors about Cred’s lending and investment practices. The judge accepted their guilty pleas and scheduled August 26, 2025, for sentencing.
As part of their plea agreements, prosecutors submitted sentencing recommendations of up to 72 months for Schatt and 62 months for Podulka. Interestingly, it is below the statutory maximum of 20 years per count but reflects their cooperation and the scheme’s scope.
Notably, the collapse of Cred devastated customer portfolios. Subsequent crypto market recoveries saw the aggregate value of those assets exceed $783 million as of mid-2024. Thousands of users remain in bankruptcy proceedings, awaiting distribution schedules and asset recoveries under court supervision.
Other Pre-2020 Crypto Lenders Collapse
Launched in 2017 with promises of up to 18.6% yields, Celsius Network amassed over $20 billion in user deposits at its peak. In 2022, the lender suspended operations and filed for bankruptcy. Its founder, Alex Mashinsky, was recently sentenced to 12 years in prison.
BlockFi also offered interest-bearing accounts and crypto-backed loans, growing to manage over $15 billion in assets by early 2022. Amid FTX’s collapse, BlockFi filed for bankruptcy protection, acknowledging exposure to Three Arrows Capital and FTX.
Nonetheless, some lending platforms survived the dark times of crypto. Nexo never paused customer withdrawals even during 2022’s market turmoil. Last month, Nexo re-entered the United States market following its rebrand and service expansion.
