Executives receive an 88-month prison sentence for their involvement in a wire fraud conspiracy, resulting in a $140 million bankruptcy
In a series of high-profile cases, several cryptocurrency executives have been sentenced for their roles in fraudulent activities, with total losses estimated to be over $1 billion.
One of the most notable cases involves Cred LLC, a San Francisco-based cryptocurrency lending firm that filed for bankruptcy in November 2020. Daniel Schatt, the former CEO of Cred LLC, and Joseph Podulka, the former CFO, have been sentenced for their roles in a wire fraud conspiracy. Schatt received a 52-month prison sentence, while Podulka received a 36-month sentence.
The business model of Cred involved loaning a percentage of customers' funds to a Chinese company for high-interest microloans to generate interest. However, the executives hid from customers and investors the fact that the Chinese company would be unable to pay back tens of millions of dollars, leading to about $1 billion customer losses according to current coin valuations.
Customers and investors of Cred LLC have filed over 6,000 claims, now worth more than $140 million based on August 2025 valuations. An additional restitution hearing is scheduled for October 7, 2025.
Alex Mashinsky, the founder and former CEO of bankrupt crypto lending platform Celsius, has also been sentenced to 12 years in prison for fraud. Travis Ford, co-founder and head trader of Wolf Capital, has pleaded guilty to wire fraud conspiracy charges.
In a public 'Ask Management Anything' session on March 18, 2020, Schatt reassured everyone that Cred was 'operating normally.' However, it appears that this was not the case.
The SEC has dismissed several high-profile cases involving some giants in the crypto industry, but U.S. Attorney Craig Missakian has promised to hold wrongdoers accountable for fraud targeting cryptocurrency investors and customers. This includes Do Kwon of Terraform Labs, who has pleaded guilty to fraud charges.
Both Schatt and Podulka will begin serving their sentences on October 28, 2025, while Mashinsky and Ford are expected to start serving their sentences at a later date.
The business also relied on a hedging strategy and used a third-party company to protect against crypto market fluctuations. Despite these measures, the fraudulent activities have had a significant impact on the crypto industry and its investors.
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