Two Former Cred Executives Plead Guilty to Fraud in Crypto Lending Platform's $150 Million Collapse
San Francisco, May 14, 2025 — Two former senior executives of crypto lending platform Cred Inc. have pleaded guilty to wire fraud conspiracy charges, in a case that saw more than $150 million in customer crypto assets disappear when the company collapsed in 2020.
Daniel Schatt, co-founder and CEO, and Joseph Podulka, former CFO, pleaded guilty in San Francisco federal court on Tuesday. The two admitted to intentionally misleading customers about Cred’s financial situation, especially during the volatile market in early 2020.
“They presented a false positive picture and intentionally concealed negative information to attract more money from customers,” US District Judge William Alsup said in a statement.
A sudden collapse amid market turmoil
Cred was once one of the leading crypto lending platforms in the US, allowing users to deposit BTC, ETH, and stablecoins to earn attractive interest rates. However, when Bitcoin prices plunged 40% in March 2020 amid the COVID-19 pandemic, the platform faced a severe liquidity crisis.
“Bitcoin’s sharp decline created serious risks for Cred,” Schatt testified in court. The company was then unable to meet margin calls, leading to a halt in payments and the freezing of customer accounts.
To make matters worse, MoKredit—Cred’s primary lending partner and also run by co-founder Lu Hua—failed to repay a $40 million loan. According to the indictment, about 80% of Cred’s customer assets were transferred to MoKredit, tying the platform’s solvency to an opaque source of the loans.
“Cred continued to conceal MoKredit’s repeated defaults,” Judge Alsup said. “That strategy continued despite the company’s full knowledge of the company’s bad debt situation.”
Victim of multiple internal scandals
In addition to the losses from MoKredit, Cred was also the victim of an internal fraud, with CFO James Alexander allegedly stealing about $2 million in Bitcoin. A separate indictment against Alexander was unsealed last year.
Additionally, Schatt admitted that Cred lost another 800 BTC (worth over $9 million) to another scam in late 2020.
The company officially filed for bankruptcy in October 2020, after a large number of users were unable to withdraw their funds. According to the bankruptcy filing, more than 6,000 claims have been filed, totaling over $140 million.
Sentencing Recommendations and Upcoming Trial
Federal prosecutors are seeking a maximum sentence of 72 months in prison for Schatt and 62 months for Podulka. The official sentencing hearing is scheduled for August 26, 2025.
The case continues to be seen as a major lesson in the ethical and legal risks in the decentralized finance industry, especially in the context of the rapid growth of crypto lending platforms without independent oversight and audits.