Crypto Bosses Get Time Off 💸

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Right then. It appears some chaps over at Cred LLC – a firm that dabbled in the frankly bewildering world of cryptocurrency lending – have found themselves in a bit of a pickle. A pickle involving bars, cells, and a distinct lack of shiny digital coins. Two former executives, Daniel Schat and Joseph Podulka, have been officially informed that “borrowing” money from customers and pretending everything was perfectly spiffing is frowned upon. 🤨

Mr. Schat, the Co-Founder and CEO (a title that sounds terribly important, doesn’t it?), has been sentenced to a brisk 52 months in Her Majesty’s… er, *His* Majesty’s Federal Prison. Mr. Podulka, the Chief Financial Officer – the fellow who presumably kept track of where all the money went (or didn’t) – will be spending a slightly less extended 36 months contemplating the error of his ways. There was a third gent involved, James Alexander, but we’ll leave him for another day. The charges, as you might suspect, involved a fair bit of what the authorities rather sternly call “wire fraud.”

Apparently, Messrs. Schat and Podulka weren’t entirely forthcoming about the state of Cred’s finances. You know, the sort of thing one *should* probably be forthcoming about when other people’s money is involved. U.S. Attorney Craig Missakian, with the air of a headmaster addressing particularly naughty students, declared that this sort of shenanigans “will not be tolerated.” A very firm statement, that. 📢

The Scheme, or: How Not to Run a Cryptocurrency Lending Firm

Cred, you see, offered customers the opportunity to earn interest on their cryptocurrencies – which sounds lovely, in theory. They also lent money *using* cryptocurrencies as collateral. This is often where things get a little wobbly. The whole enterprise relied on two arrangements which, shall we say, weren’t exactly fortified with stone and common sense.

It turns out Cred was rather reliant on a company in China (linked, naturally, to one of the co-founders) to actually generate the promised interest. A company which, in turn, used customer funds to lend to… gamers. Yes, gamers. Apparently, the highest and best use of your cryptocurrency is funding someone else’s digital adventures. 🎮 And, simultaneously, they were attempting to hedge against the wild swings of the crypto market with another firm. It’s all starting to sound a bit like a house built on, well, everything unstable.

Then along came 2020. The pandemic arrived, Bitcoin had a bit of a wobble, and, predictably, both arrangements cratered. The hedging firm demanded everything back, the Chinese company declared it couldn’t repay the tens of millions borrowed, and Cred’s finances resembled a particularly sad pile of rubble. But instead of admitting any difficulties, Messrs. Schat and Podulka insisted everything was “operating normally”. One suspects they were using a *very* liberal definition of “normal”. 🤥

November 2020 saw Cred filing for bankruptcy. Over 6,000 customers and investors collectively wept over losses of around $140 million. Now, given the current state of cryptocurrency values, prosecutors estimate that’s closer to a rather substantial $1 billion. One has to wonder if the gamers had a really good year.

The two gentlemen received three years of supervised release, a $25,000 fine, and a formal invitation to consider a change of career. A hearing is scheduled for October 2025 to determine just how much of the money they need to return. They’ll be reporting to prison on October 28, 2025 – giving them a little time to prepare their prison library. 📚

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2025-08-30 16:00