Senior U.S. District Judge William Alsup sentenced Daniel Schatt and Joseph Podulka after May guilty pleas; legal experts told Decrypt the case sets accountability benchmarks following Cred’s collapse and $140 million in customer losses.
A federal judge sentenced former Cred CEO Daniel Schatt to 52 months and former CFO Joseph Podulka to 36 months in prison after both pleaded guilty in May to wire fraud conspiracy. Prosecutors said the executives misled customers about Cred’s financial health and secretly directed about 80% of customer assets into high-risk microloans to Chinese gamers via an affiliate. The scheme collapsed during the 2020 crypto market crash, with more than 440,000 customers losing $140 million—now worth over $1 billion at current prices—with separate descriptions noting losses up to $150 million. In a March 18, 2020 session, Schatt told customers Cred was operating normally despite a liquidity crisis. Cred also lost $9 million to a crypto scam, and Chief Capital Officer James Alexander allegedly appropriated about 255 BTC before being terminated. Legal expert Ishita Sharma told Decrypt the sentences reflect factors such as loss amount, role, and acceptance of responsibility, noting Schatt’s term is shorter than Sam Bankman-Fried’s 25 years but longer than several plea-based outcomes. She added courts weigh sector-wide reputational harm and deterrence, urging firms to adopt proactive disclosure and a regulation-by-analogy approach. Both men will begin serving terms on October 28, each must pay a $25,000 fine, and each faces three years of supervised release; a restitution hearing is set for October 7.