My Big Coin founder Randall Crater was convicted of charges related to fraud and misleading investors over the value of his cryptocurrency.
The founder of a cryptocurrency payment service company was convicted by a federal jury in New York on Thursday of defrauding investors with a fraudulent digital currency.
Randall Crater, the founder of My Big Coin, hocked a digital currency called “My Big Coins” which he marketed to investors between 2014 and 2017. Crater was found guilty of misrepresenting the value of the digital currency to investors via social media, the internet, e-mails, and text messages.
One key lie Crater promulgated was that “My Big Coins” were were backed by $300 million in gold, oil, and other commodities. He also told investors that his company won a partnership with MasterCard and individual coins could be readily exchanged for fiat money or other widely-accepted currencies.
“My Big Coins” were not actually backed by any commodity or asset. In January 2018, the Commodity Futures Trading Commission announced commodity fraud charges against Crater as well as civil charges against the chief executive officer of My Big Coin, John Roche, and associates Mark Gillespie and Michael Kruger.
Over the course of the scheme, Crater misappropriated more than $6 million in investor funding for personal gain, including purchasing artwork, antiques, and jewelry.
He was convicted of four counts of wire fraud, with each count carrying up to 20 years in prison, and three counts of money laundering, which carries up to another 10 years in prison per count.
Sentencing will be handed down on Oct. 27 by a federal district court judge.
Crater and My Big Coin’s trial is a landmark case against cryptocurrency payment services as the federal government works to establish regulatory guidelines around the digital asset industry.
The Department of Justice recently announced its 2022-2026 Strategic Plan, factoring in efforts to rein in cyber criminals as well as supporting consumer protection.
Simultaneously, the Federal Reserve is working on establishing a blueprint for future monetary policy that includes digital currencies and how to safely use them in transactions.