Cred Execs Sentenced in Crypto Fraud Scheme

SAN FRANCISCO – The house of cards finally crumbled for two former executives of Cred LLC. Daniel Schatt, 55, of San Mateo, and Joseph Podulka, 53, of Palo Alto, received federal prison sentences today after admitting to running a wire fraud conspiracy that ripped off customers of the cryptocurrency lending firm. Schatt was slapped with 52 months, while Podulka will serve 36 months, handed down by Senior U.S. District Judge William Alsup.

The pair were indicted by a federal grand jury in May 2024 and both pleaded guilty on May 13, 2025, to one count of wire fraud conspiracy. As CEO and CFO respectively, Schatt and Podulka knowingly painted a rosy picture of Cred’s finances, deliberately hiding the rot underneath. They failed to disclose the mounting business challenges and risks to the very people who entrusted them with their digital assets.

“The defendants’ criminal conspiracy caused significant harm to Cred’s customers,” stated United States Attorney Craig H. Missakian. “This prosecution should serve as a reminder that my Office will aggressively prosecute fraud schemes undermining the integrity of cryptocurrency markets. Fraud targeting cryptocurrency investors and customers will not be tolerated and wrongdoers will be held accountable for their actions.” The scheme, built on shaky foundations, began to unravel in March 2020 with the COVID-19 pandemic and a brutal Bitcoin price crash.

Cred’s business model was already precarious, relying on a complex web of relationships. They offered loans in U.S. dollars, using customers’ cryptocurrency as collateral, and accepted crypto deposits promising juicy interest rates. But the interest payments weren’t coming from some magical innovation; they were dependent on a Chinese company founded by a Cred co-founder. This company, in turn, made risky, high-interest loans to Chinese gamers. To further complicate things, Cred relied on a third-party hedging strategy to shield themselves from crypto market volatility—a strategy that evaporated when their hedging partner pulled the plug after the Bitcoin plunge.

According to the plea agreements, the situation spiraled quickly. Within days of the Bitcoin crash, Cred learned they were hemorrhaging money, and their hedging partner bailed. Simultaneously, the Chinese company signaled it couldn’t repay tens of millions of dollars. Instead of coming clean, Schatt and Podulka allegedly doubled down on the deception, continuing to mislead customers about the company’s true financial state. The FBI and IRS-CI worked jointly on the investigation. “Cryptocurrency may still seem foreign to some people, but investment fraud schemes are nothing new,” said IRS Criminal Investigation (IRS-CI) Oakland Field Office Special Agent in Charge Linda Nguyen.

“Daniel Schatt and Joseph Podulka orchestrated a scheme in which they deceived both investors and customers out of their hard-earned funds in an attempt to extend a failing business,” added Acting FBI Special Agent in Charge Matt Cobo. “The FBI is committed to investigating investment fraud schemes targeting cryptocurrency holders and working with our partners to bring fraudsters to justice.” The case serves as a stark warning: the Wild West days of unregulated crypto are fading, and federal investigators are watching. Those who exploit the system will face the consequences.

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