Skip to content
News

Former credit executives face combined 88-month prison sentence following the collapse of a $140 million deal

Two high-ranking officials previously employed at collapsed cryptocurrency lender Cred have received sentences totaling 88 months behind bars, having been found guilty of conspiring to commit wire fraud.

,   and  Administrator
2 min read
Former ex-executives of Cred Corp are handed an aggregated sentence of 88 months in prison...
Former ex-executives of Cred Corp are handed an aggregated sentence of 88 months in prison following the fall of their company, resulting in a loss of $140 million.

Former credit executives face combined 88-month prison sentence following the collapse of a $140 million deal

In the tumultuous world of cryptocurrency, Cred LLC, a digital asset lending platform, has found itself in a stormy sea. A series of financial problems, misleading customer assurances, and unexpected partnership complications have led to a challenging situation for the company.

The trouble began in March 2020, when a Bitcoin price crash occurred, causing a significant impact on Cred's operations. This event was followed by a sudden development: Cred's hedging partner informed the company that it was financially underwater and needed to liquidate all trading positions immediately. The abrupt end of this hedging relationship left Cred without protection against future market swings.

During a public "Ask Management Anything" session on March 18, 2020, Cred's executive Schatt assured customers that the company was "operating normally" despite being aware of severe financial distress. However, it was later revealed that Cred's reliance on a Chinese company for generating customer yields resulted in the company being unable to repay tens of millions of dollars.

Cred's questionable practices did not stop there. It was found that instead of disclosing these financial problems, the company's executives misled customers about the company's health. This deception was a stark contrast to the transparency that customers expect from a financial institution.

In a recent turn of events, both executives involved have been sentenced to three years of supervised release and have been ordered to pay a fine of $25,000 each.

In a separate development, Tether has halted the freeze on USDT on legacy chains and has adopted an 'unsupported' status. This move could have far-reaching implications for the cryptocurrency market, but its direct impact on Cred LLC remains to be seen.

As the dust settles, Cred LLC continues to navigate the complexities of the digital asset lending industry. The company's experiences serve as a reminder of the importance of transparency, financial responsibility, and customer trust in the rapidly evolving world of cryptocurrency.

Read also:

Related

Latest