According to Odaily Planet Daily, three former executives of Cred, a bankrupt cryptocurrency lender, have been charged with involvement in wire fraud and money laundering before declaring bankruptcy in November 2020. The U.S. Attorney's Office for the Northern District of California said in a statement on May 3 that the prosecution demonstrated their determination to protect the market from fraudsters and protect the safety of investors.
Former CEO Daniel Schatt and CFO Joseph Podulka face 13 counts of wire fraud and money laundering, and former COO James Alexander is charged with four counts. Mark Mosley, acting special agent in charge of IRS Criminal Investigation, said this highlights a predatory and deceptive scheme that involved defrauding potential victims of hundreds of millions of dollars in cryptocurrency.
Prosecutors allege that the three executives misled customers about Cred’s lending and investment practices. Cred claimed to only engage in “collateralized or secured lending,” that Cred’s cryptocurrency investments were “hedged,” and that Cred maintained a “24/7 approach” to investments to protect against volatility. However, prosecutors allege that Cred’s lending business was “neither collateralized nor secured.”