Fake cryptocurrency provider will be sentenced for fraud scheme in the fall.
Cryptocurrencies are quickly becoming a more widely accepted form of payment, both online and offline. And the blockchain technology underlying most cryptocurrencies is becoming more commonly adopted by businesses and organizations. Reputable companies developing this form of payment have witnessed vast success. However, not all cryptocurrency providers have their customers best intentions in mind. My Big Coin Pay Inc. founded Randall Crater, 51, of New York was recently convicted by a federal jury of heading a scheme to defraud investors by marketing and selling fraudulent virtual currency. According to court documents, Carter established My Big Coin Pay in Las Vegas and began offering virtual payment services through a fraudulent digital currency (My Big Coins) which he marketed to customers in the three-year span between 2014 and 2017 using false statements about the value of these coins.
Crater and his co-conspirators said that the cryptocurrency was a “backed by $300 million in gold, oil and other valuable assets,” and told investors that “My Big Coin had a partnership with MasterCard and that coins could readily be exchanged for government-backed paper currency or other virtual currencies,” according to the U.S. Department of Justice (DOJ), which added, “Crater promulgated these misrepresentations through social media, the internet, email and text messages.”
One exhibit specifically showed that in a Jan. 28, 2015, email exchange, Crater wrote to an investor that “we have 300 million in gold backing us.” The indictment stated, “Rather than use investor funds as promised, Crater misappropriated $6 million for his personal uses, such as buying artwork, antiques and jewelry.”
The reality is, My Big Coins “were not backed by gold or other valuable assets, did not have a partnership with MasterCard and were not readily transferable,” according to the U.S. Department of Justice (DOJ). The co-conspirators were able to pull off a large scale scam that would inevitably result in those involved losing a substantial amount of money.
Eventually, in January 2018, the Commodity Futures Trading Commission (CFTC) cracked down on the company and announced it would be bringing “commodity fraud charges” against Crater and My Big Coin Pay Inc. The CFTC also filed civil charges against the Chief Executive Officer (CEO) of My Big Coin, John Roche, and two of Crater’s co-conspirators, Mark Gillespie and Michael Kruger.
Crater was ultimately convicted of “four counts of wire fraud,” and he will face a maximum sentence of 20 years behind bars for each count. He was also convicted of “three counts of money laundering,” which carries a maximum penalty of up to a decade in prison for each count. The defendant is scheduled to be sentenced on October 27, 2022, and at that time, a federal district court judge will determine how much time Crater will spend incarcerated for each offense.
Ray Chandler, an attorney for Crater, maintained that his client is innocent. “There are dozens and dozens of documents available that show Mr. Crater made every effort to create a viable virtual currency,” he said.