Three ex-executives of defunct cryptocurrency lender Cred are facing legal action, accused of wire fraud and money laundering before the company's bankruptcy in November 2020. The charges underscore a commitment to safeguarding financial markets, as stated by the United States Attorney’s Office for the Northern District of California.

Former CEO Daniel Schatt and CFO Joseph Podulka are confronted with a total of 13 charges, while CCO James Alexander faces four counts. Mark Mosley, Acting Special Agent in Charge of IRS Criminal Investigation, characterized the alleged scheme as deceptive and predatory, defrauding potential victims of cryptocurrency valued at hundreds of millions of dollars.

Prosecutors contend that Cred misled customers about its lending and investment practices, claiming to exclusively engage in collateralized or guaranteed lending, with cryptocurrency investments purportedly hedged against volatility. However, the prosecution argues that Cred's lending practices were not collateralized nor guaranteed, contrary to its representations.

Following Cred's bankruptcy declaration, users expressed concerns about the safety of their funds on social media platforms. Schatt and Podulka made their initial court appearance on May 2 and are scheduled to enter a plea on May 8, while Alexander's court date is pending. This legal action coincides with the forthcoming sentencing hearing of Alex Mashinsky, the former CEO of another crypto lender, in September 2024. Genesis, a crypto lending firm that also filed for bankruptcy in January 2023, is actively seeking to settle its debts with creditors, having liquidated a significant portion of its assets in Bitcoin to this end.