Two former leaders of the bankrupt cryptography loan service pleaded guilty of fraud by thread linked to the collapse of the company.
Former CRED CEO, Daniel Shatt, and financial director Joseph Podulka admitted to having spun the fraud in the context of a advocacy agreement with the prosecutors, according to a depositor of the May 13 text before a district court in California.
District judge William Alsup accepted the advocacy agreements and established an hearing for determining the sentence for August 26. Wire fraud can bring up to 20 years in prison and $ 250,000 in fines for individuals and $ 500.00 for businesses.
Law360 said that as part of the advocacy agreement, Shatt and Podulka admitted to having selectively presented “positive information [while] Do not disclose negative news “as part of a plan to” encourage customers to lend their motto and digital currencies in the United States “.
Federal prosecutors would have submitted a possible sequence of sentence of up to 72 months for SCHATTT and up to 62 months for Podulka. SChatt and Podulka faced 13 accusations of wire fraud and money laundering.
Credit customer losses more than $ 150 million
When the CRED collapsed and filed for a bankruptcy, its customers suffered losses up to $ 150 million, but the US justice ministry said in May 2024 that the assets had since climbed a market value greater than $ 783 million.
In the advocacy agreement, the defendants agreed that their actions have led to losses between $ 65 and $ 150 million for users.
The former commercial director of Cred James Alexander was also struck by accusations of wire fraud and money laundering.
Prosecutors alleged that CREC managers had misleaded customers about CRED’s loan and investment practices and did not reveal that its loan book was based strongly on a Chinese company called Mokredit Inc. which made unsecured microlaves to Chinese players.
CRED would also have allegedly claimed that engaging in guaranteed loans, and all of its cryptographic investments were covered, which, according to prosecutors, was false.
After the Bitcoin (BTC) price fell 40% on March 11, 2020, CRED could not answer its margin calls and approached insolvency, and the three managers asked for new customers while minimizing risks, prosecutors said.
When CRED said bankruptcy in November 2020, many users turned to social media to express concerns and ask if their funds were safe.
In relation: The Hand Stock Exchange
Other Crypto founders also faced legal consequences this year. Alex Mashinsky, the founder and former CEO of the Celsius bankruptcy loan platform was sentenced to 12 years in prison on May 8.
Meanwhile, the co -founder and trader of Wolf Capital, Travis Ford, pleaded guilty on January 10 for fraud to fraud for his role in the collection of more than $ 9 million to investors with false promises of high yields.
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