Former Cred LLC executives Daniel Schatt and Joseph Podulka were handed federal prison terms this week after pleading guilty to a wire fraud conspiracy tied to the collapse of the crypto lender.
According to court records and Justice Department statements, Schatt will serve 52 months and Podulka will serve 36 months. Both men face three years of supervised release and were each fined $25,000.
Sentences And Timeline
Based on reports, the two were indicted in May 2024 and entered guilty pleas on May 13, 2025, admitting to conspiring to mislead customers about Cred’s finances.
Schatt, 55, of San Mateo, and Podulka, 53, of Palo Alto, were sentenced by Senior US District Judge William Alsup on August 29, 2025.
Their prison terms will begin on October 28, 2025. A restitution hearing is scheduled for October 7, 2025, where the court will consider how losses will be repaid to victims.
Daniel Schatt and Joseph Podulka were sentenced to multi-year federal prison sentences for misleading investors about the failing crypto investments of Cred LLC. Customer losses are valued at over $1 billion.
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— IRS Criminal Investigation (@IRS_CI) September 2, 2025
Cred once offered two main customer services: loans in US dollars secured by customers’ cryptocurrency collateral, and deposit accounts that promised yield on crypto holdings.
The business model relied heavily on a relationship with a Chinese firm that, unbeknown to many customers, received portions of customer funds to generate the interest Cred paid.
A separate hedging arrangement with a third-party was supposed to protect Cred from sharp crypto swings.
BTCUSD trading at $111,144 on the 24-hour chart: TradingView
How The Scheme Worked
Reports have disclosed that the trouble accelerated in March 2020. A swift drop in Bitcoin prices left Cred exposed and its hedging partner warned the company that it needed to liquidate trading positions.
The hedging arrangement then ended, and Cred learned it could not count on payments from the Chinese partner for tens of millions of dollars.
Rather than tell customers the full picture, prosecutors say, management presented an incomplete and overly positive account of Cred’s condition.
Image: Lynn, Jackson, Shultz & Lebrun, P.C.
Schatt’s public Ask Management Anything session on March 18, 2020, where he said Cred was “operating normally,” is singled out in filings as an example.
When Cred filed for bankruptcy on November 7, 2020, customers and investors filed more than 6,000 claims totaling about $140 million in nominal losses.
Based on August 2025 valuations for the cryptocurrencies involved, those claims are valued at over $1 billion, a gap that highlights how volatile crypto prices can magnify earlier losses.
Legal Process And Officials’ Statements
According to the Justice Department, Assistant US Attorneys Barbara Valliere, Patrick O’Brien, Richard Ewenstein, and Adam Reeves prosecuted the case with help from Helen Yee and Maryam Beros.
The FBI and IRS Criminal Investigation Oakland Field Office led the probe. US Attorney Craig H. Missakian was quoted as saying the prosecution aims to hold fraudsters accountable and to protect crypto investors.
Featured image from Meta, chart from TradingView
