Two former executives of the bankrupt crypto lending service Cred have pleaded guilty to wire fraud connected to the company’s collapse.

Former Cred CEO Daniel Schatt and chief financial officer Joseph Podulka admitted to wire fraud as part of a plea deal with prosecutors, according to a May 13 text filing in a California District Court.

District Judge William Alsup accepted the plea deals and set a sentencing hearing for Aug. 26. Wire fraud can carry up to 20 years in prison and $250,000 in fines for individuals and $500,00 for businesses.

After accepting the defendant’s guilty plea, Judge William Alsup set a sentencing hearing for August. Source: PACER

Law360 reported that as part of the plea agreement, Schatt and Podulka admitted to selectively presenting positive “information [while] failing to disclose negative news” as part of a plan to “induce customers to lend their US currency and digital currencies to Cred.”

Federal prosecutors have reportedly submitted a possible sentence range of up to 72 months for Schatt and up to 62 months for Podulka. Schatt and Podulka were facing 13 charges of wire fraud and money laundering.

Cred customer losses exceed $150 million 

When Cred collapsed and filed for bankruptcy, its customers suffered losses of up to $150 million, but the US Department of Justice said in May 2024 that the assets had since climbed to a market value exceeding $783 million.

In the plea agreement, the defendants agreed that their actions led to losses of between $65 million and $150 million for users.

Former Cred chief commercial officer James Alexander was also hit with wire fraud and money laundering charges.

Prosecutors alleged that the Cred executives misled customers about Cred’s lending and investment practices and didn’t disclose that its loan book relied heavily on the Chinese firm MoKredit, which made unsecured microloans to Chinese gamers.

Cred also allegedly claimed to only engage in collateralized lending, and all its crypto investments were hedged, which prosecutors say was false.

After the price of Bitcoin (BTC) dropped by 40% on March 11, 2020, Cred could not meet its margin calls and neared insolvency, and the three executives sought out new customers while downplaying the risks, prosecutors claimed. 

When Cred declared bankruptcy in November 2020, numerous users turned to social media to voice concerns and ask if their funds were safe.

Related: Uphold exchange denies owing millions to failed crypto lender Cred

Other crypto founders have also faced legal consequences this year. Alex Mashinsky, the founder and former CEO of bankrupt crypto lending platform Celsius, was sentenced to 12 years in prison for fraud on May 8.

Meanwhile, Wolf Capital co-founder and head trader Travis Ford pleaded guilty on Jan. 10 to wire fraud conspiracy charges for his role in raising over $9 million from investors with false promises of high returns.

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Once a go-to swapper for hackers and drainers, eXch was shut down by German police in April — but continued activity suggests the story isn’t over.

Without Know Your Customer (KYC) checks, eXch wasn’t your typical crypto exchange. It acted more like an instant swapper, allowing bad actors and cybercriminals to fly under the radar for years.

Among its clients was the Lazarus Group. The North Korean state-backed hacking unit thrust eXch into the spotlight back in February, when it used the platform to funnel some of the $1.4 billion it stole from Bybit. When Bybit traced its stolen funds to eXch, it requested assistance — but the platform refused.

This led to a fierce discussion over privacy versus security, but ultimately, eXch announced it would close its doors on April 17; on April 30, German authorities made it official.

But according to security firm TRM Labs, the platform may have continued operating in stealth mode after the takedown. Here’s the rise, fall and afterlife of alleged crypto laundromat eXch.

eXch shuts front door, keeps back door unlocked

Alongside its shutdown announcement, eXch posted a message claiming it would not facilitate criminal proceeds. The post was removed within hours, and operations quietly resumed — signs of an internal disagreement or perhaps even a calculated attempt to lower visibility, according to TRM.

CSAM-related fund flows traced to eXch. Source: TRM Labs

German authorities seized eXch’s servers and confiscated 34 million euros ($38 million) in crypto, along with more than eight terabytes of data, effectively dismantling its public-facing infrastructure.

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“Just like we saw with Garantex rebranding as Grinex, eXch didn’t fully die after the shutdown. It quietly kept servicing a handful of partners via API, which meant laundering activity continued even after the public takedown,” said Jeremiah O’Connor, co-founder and chief technology officer of security firm Trugard.

O’Connor added that it’s not unlikely for such platforms to serve loyal customers even after seizures.

EXch website visited on May 13. Source: eXch

“The people behind eXch.ch took full advantage of operating across multiple countries. The domain was registered through a UK-based provider, listed Switzerland as an admin location, hosted infrastructure in France, and had servers seized in Germany,” O’Connor said.

It’s still unclear if eXch will kill its API or come back under a new name. TRM said in the May 2 blog post that the platform’s remaining back-end access continued to provide anonymization infrastructure for threat actors.

No KYC, pooled liquidity draws illicit funds to eXch

EXch’s origins trace back to 2014, according to “Fantasy,” lead investigator at crypto insurance firm Fairside Network. In an October 2024 investigation, Fantasy identified the platform’s first public appearance as a BitcoinTalk forum account promoting automatic swaps between Bitcoin (BTC), Perfect Money and BTC-e vouchers — payment methods commonly associated with high-risk transactions.

Fantasy also traced the original Bitcoin wallet tied to eXch and found it was likely funded via BTC-e, the now-defunct crypto exchange shuttered by US authorities in 2017 for its role in laundering criminal proceeds.

Fantasy’s forensic research found that the modernized form of eXch emerged in 2022, when its Ethereum hot wallet was first funded. Not long after, it became a hub for prominent crypto drainers.

Monkey Drainer — the first known large-scale drainer-as-a-service operator — used eXch before its retirement. Other draining service providers like Pink Drainer and Inferno Drainer also passed funds through the platform, along with several major exploiters.

EXch’s modern wallets traced to accounts held at Binance and OKX. Source: Fantasy/MetaSleuth

EXch required no identity verification, allowing users to move funds with anonymity. That made it an attractive tool for cybercriminals looking to clean stolen assets.

“EXch managed to stay active for years — despite facilitating obvious illicit activity — because there’s still a big gap between what regulators ‘can’ do and how fast technology is moving,” Amit Levin, former investigator at Binance, told Cointelegraph.

“In today’s world, anyone can launch a smart contract or run a crypto service from anywhere, often without revealing who they are. And if there’s no registration, no KYC and no one to hold accountable, enforcement becomes close to impossible.”

The platform also drew confidence from threat actors by using a pooled liquidity system that blended user deposits and withdrawals, making it difficult for investigators and law enforcement to trace the flow of funds.

When eXch knew and did nothing

EXch denied laundering funds for North Korean crypto hackers, and in its shutdown notice, it framed the project as an attempt by privacy enthusiasts to “restore balance” in the industry. It criticized Anti-Money Laundering enforcement and condemned companies offering address risk scoring APIs as “parasites” profiting off government fear.

“Service providers in the crypto space are, for the most part, not decentralized; that is, they retain control over or access to customers’ assets, as demonstrated in the case of eXch,” Gal Arad Cohen, partner at S. Horowitz & Co, told Cointelegraph.

“A financial intermediary operating in the crypto sector faces risks similar to those of traditional financial service providers and should, therefore, be held to equivalent standards and regulatory requirements,” she said.

The closure of eXch is a “huge win” for crypto, according to Alex Katz, CEO of security firm Kerberus. However, Katz warned that bad actors can migrate to alternative projects, like THORChain, which received a shoutout in eXch’s unapologetic farewell manifesto.

In the Bybit hack, decentralized swap protocol THORChain was used as the main bridge to swap around 500,000 Ether (ETH) to Bitcoin.

EXch operators also used THORChain to allegedly obfuscate trails. Source: Tanuki42

EXch stated that its partners would retain access to its API for a limited time, but future operations would depend on the “new management team.” The old team recommended setting up new liquidity pools to maintain seamless functionality and said it would provide consultations.

It signed off with a defiant message: “Privacy is not a crime.”

German authorities reported that $1.9 billion in crypto flowed into eXch since its inception. Its operators are suspected of commercial money laundering and running a criminal trading platform.

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Crypto venture capital deals in the first quarter of 2025 saw deal values jump even as the number of deals sank from the same quarter a year ago, says PitchBook.

The venture research firm said in its May 14 Crypto VC Trends report for Q1 that 405 deals were made in the quarter, down 39.5% from the 670 deals made in Q1 2024, but slightly up from the 372 made in Q4 last year.

However, the total value of deals in Q1 more than doubled from a year ago, jumping to $6 billion compared to $2.6 billion in the first quarter of 2024 and doubling from $3 billion in Q4 2024.

PitchBook’s senior crypto research analyst Robert Le said that despite macroeconomic turmoil over the quarter, “capital continued to seek crypto’s core utility rails.”

VCs poured nearly $2.55 billion across 16 deals into businesses like crypto asset managers, exchanges, and financial services at a rate that far surpassed any other segment.

Crypto infrastructure and development firms saw the next largest venture funding, fetching nearly $955 million across 30 deals.

Web3-focused companies saw the third-most deals and funding, at 23 and $231.2 million, respectively. Source: PitchBook.

Looking ahead, PitchBook’s Le said Circle’s pending initial public offering (IPO) “represents the most important price-discovery event for crypto equity since Coinbase listed in 2021.”

If Circle is valued above the rumored $4 billion to $5 billion range, it could show venture investors that business models similar to Circle’s are profitable and sustainable while also providing a clearer benchmark for future exits.

“A strong roadshow could therefore crowd in new late-stage capital and reset valuation expectations upward across the payments and infrastructure stack.”

Circle has raised $1.18 billion in VC funding to date, according to PitchBook, which estimates a 64% chance that it will go public in the future.

“Dollar-denominated settlement remains crypto’s killer application”

Le noted that the market value of stablecoins grew 12% over the first quarter, from $202.3 billion to $227.1 billion, even as other cryptocurrencies saw their values fall or stagnate.

“In our view, this divergence underscores a growing consensus: Dollar-denominated settlement remains crypto’s killer application, insulated—at least partially— from broader risk-off moves.”

Le said PitchBook expected that near-term venture investments could increase, “especially in payment, remittance, and treasury-management startups that directly monetize stablecoin velocity.”

Related: Bitcoin builders defend venture capital’s role in layer-2 growth

Le added that the $1.4 billion Bybit exploit in February — the largest in crypto history — may accelerate institutional demand for real-time proof-of-reserve tooling, improved custody solutions and middleware that simplifies key management.

“Startups addressing those vectors should find a more receptive funding environment despite the broader valuation reset,” he added.

Notable crypto venture-backed or growth-stage companies that received investment in Q4 2024. Source: PitchBook

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