Former Cred Executives Jailed for Crypto Scam, Clients Seek Over $1 Billion in Claims

On August 29, U.S. Attorney's Office, Northern District of California, announced that former executives of cryptocurrency lending firm Cred LLC were sentenced to prison for wire fraud.

Headquartered in San Francisco, Cred LLC provided financial services to holders of cryptocurrencies and other assets before ceasing operations.

Cred co-founder and former CEO Daniel Schatt was sentenced to 52 months in prison, while former CFO Joseph Podulka received a 36-month sentence. The two pleaded guilty in May to conspiracy to commit wire fraud.

According to the court documents, they admitted to making incomplete, unreasonably positive and misleading statement about Cred's business. They also failed to disclose important negative information about Cred's business challenges and risks to investors.

It is reported that Cred invested over 80% of client funds in high-risk microloans, while an affiliated company gave the loans to Chinese online gamers.

In March 2020, a sharp decline in Bitcoin prices plunged Cred into financial losses. At the same time, its affiliated company was unable to repay tens of millions of dollars in debt.

Despite this, Cred executives failed to truthfully disclose the company's deteriorating financial condition to clients. They even stated during a public meeting on March 18, 2020, that Cred were “operating normally.”

On November 7, 2020, Cred officially declared bankruptcy. At that time, thieir clients had filed over 6,000 claims totaling $140 million. Based on the prices of cryptocurrencies as of August 2025, the value of these claims has now exceeded $1 billion.

BrokersView reminds you

Exercise extreme caution when receiving information or instructions related to cryptocurrency. Due to the anonymous nature of cryptocurrency, victims of scams not only suffer losses but also face significant difficulties in recovering their funds.

If you have also fallen victim to a similar scam, you can report it through BrokersView to help protect other investors from falling into the same trap.