diff --git a/lcli/src/new_testnet.rs b/lcli/src/new_testnet.rs
index 47db1036d..06449958e 100644
--- a/lcli/src/new_testnet.rs
+++ b/lcli/src/new_testnet.rs
@@ -258,16 +258,19 @@ fn initialize_state_with_validators<T: EthSpec>(
     state.fill_randao_mixes_with(eth1_block_hash);
 
     for keypair in keypairs.iter() {
-        let withdrawal_credentials = |pubkey: &PublicKey| {
-            let mut credentials = hash(&pubkey.as_ssz_bytes());
-            credentials[0] = spec.bls_withdrawal_prefix_byte;
+        let eth1_withdrawal_credentials = |pubkey: &PublicKey| -> Hash256 {
+            let fake_execution_address = &hash(&pubkey.as_ssz_bytes())[0..20];
+            let mut credentials = [0u8; 32];
+            credentials[0] = spec.eth1_address_withdrawal_prefix_byte;
+            credentials[12..].copy_from_slice(fake_execution_address);
             Hash256::from_slice(&credentials)
         };
+
         let amount = spec.max_effective_balance;
         // Create a new validator.
         let validator = Validator {
             pubkey: keypair.0.pk.clone().into(),
-            withdrawal_credentials: withdrawal_credentials(&keypair.1.pk),
+            withdrawal_credentials: eth1_withdrawal_credentials(&keypair.1.pk),
             activation_eligibility_epoch: spec.far_future_epoch,
             activation_epoch: spec.far_future_epoch,
             exit_epoch: spec.far_future_epoch,