Three ex-executives of bankrupt cryptocurrency lender Cred have been accused of wire fraud and money laundering before the company went bankrupt in November 2020. The United States Attorney’s Office for the Northern District of California stated that this prosecution demonstrates their commitment to keeping markets free from fraud and safe for investors. Former CEO Daniel Schatt and CFO Joseph Podulka face 13 charges, while Chief Commercial Officer James Alexander faces four counts. Mark Mosley, the acting special agent in charge at the U.S. Internal Revenue Service, described it as a deceptive scheme that defrauded victims of hundreds of millions of dollars. Users had expressed concerns about the safety of their funds when Cred declared bankruptcy. Prosecutors claim that the executives misled customers about Cred’s lending and investment practices. Cred allegedly misrepresented its lending as collateralized or guaranteed, claimed its cryptocurrency investments were hedged, and stated that it followed an all-weather approach to investment. However, prosecutors argue that Cred engaged in lending that was neither collateralized nor guaranteed. Schatt and Podulka appeared in court on May 2 and will enter a plea on May 8. Alexander’s court date is yet to be determined. This comes as the former CEO of crypto lender Alex Mashinsky faces seven felony charges following the company’s collapse in July 2022. Genesis, another crypto lending firm that filed for bankruptcy in January 2023, is working on settling its debts with creditors. In April, Genesis liquidated around 36 million shares of its Grayscale Bitcoin Trust, generating $2.1 billion.
Wire fraud and money laundering charges filed against former executives of Cred