Creator of ‘My Big Coin,’ Randall Crater, Indicted in New York

By - September 6, 2019
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Earlier this year, the US District Court of Massachusetts indicted Randall Crater, the man alleged to have led a ‘My Big Coin’ cryptocurrency fraud that stole more than $6 million from mostly New York investors. (Crowdfundinsider.com)

Crater was charged with four counts of wire fraud and three counts of unlawful money transactions related to receiving large amounts of money from investors he defrauded.

The My Big Coin case was a major legal precedent because it set up the jurisdiction for the CFTC or Commodity Futures Trading Commission as having the oversight over many virtual currencies. At first, My Big Coin argued their tokens could not be regulated by the CFTC because they were not actually commodities. The judge ruling on the case saw otherwise and established the authority of the CFTC to go after these types of fraud cases.

According to the February 2019 indictment, Craters and several unnamed accomplices operated his My Big Coin scheme from 2014 to 2017. During that time, Crater and the others illegally claimed that its coins were a virtual functioning currency and possessed value. They also claimed the tokens were backed by gold and other valuable assets and could be traded via a virtual currency exchange.

A report at CNN stated that My Big Coin sellers set the value of the coins arbitrarily at $310. However, despite heavy promotion for three years, My Big Coin was never traded on any major virtual exchange.

The claims of prosecutors support this view, according to media reports. Prosecutors said during the trial that the coins were never actually backed by gold or other assets. There were no readily available exchangeable virtual currency and the coins had little actual value. Instead, Crater allegedly misappropriated $6 million investor funds for his personal use.

Prosecutors Allege Crater’s Focus Was Personal Enrichment

The prosecution also said that rather than devising a viable cryptocurrency, Crater and several accomplices were focused on personal enrichment. The prosecution alleged the major objectives of the scheme to defraud investors were for Crater and others to make money for themselves….to get millions of dollars of investor funds via false and misleading statements, promises and representations, and to hide from investors the manner and nature in which the funds were being used.

It also was alleged they used many marketing methods to promote their My Big Coin scheme, such as social media and websites to make various misrepresentations. They also sent emails, texts and used other methods to solicit investor funds.

It was also alleged that Crater put investor funds in his personal bank accounts as well as those that family members owned. Once the investor was signed up, Crater allegedly gave them false information about their accounts, such as fake balances of coins that existed in their accounts. They also allegedly published phony price data on the My Big Coin website each day to mislead investors.

Prosecutors also said they had evidence that My Big Coin had broadcasted claims that the product was backed by assets. An email stated that every coin was backed by gold. Another email claimed ‘we have $300 million in gold backing us.’

My Big Coin sellers also claimed the coins could be used with various retailers. There were no such agreements with any retailers.

Crater is further accused of going on a nearly $1 million spending spree. One of these splurges including spending $400,000 on jewelry at the Southhampton Jewellery Exchange, and buying several antique coins, rare stones, and decorative figures at a Southampton auction house, where it is alleged Crater spent $500,000.

Bitcoin Fraud Laws

Laws regarding Bitcoin fraud are still in development, but the US Commodity Futures Trading Commission (CFTC) determined in 2018 that cryptocurrencies such as Bitcoin are commodities. Thus, the CFTC can prosecute any fraud involving Bitcoin or other virtual currencies. As the above story shows, perpetrators of Bitcoin fraud scams also can be charged with wire fraud and related federal crimes.

With that ruling, fraud involving Bitcoin may be treated by the US government like any securities and commodities fraud. Securities and commodities fraud occurs when a person makes a fraudulent statement about a company, commodity or stock, and then investors make financial decisions based on this false information.

Bitcoin fraud is similar to securities and commodities fraud in that it is accomplished through common schemes to encourage investors to invest funds willingly. Securities and commodities fraud can involve embezzlement – a form of theft.

Bitcoin fraud is commonly perpetrated by the CEO of a cryptocurrency company. The CEO does not properly report financial information about the organization to shareholders or the owners of the cryptocurrency. This can boost the value of the coin artificially and encourage more people to invest. If the company declares bankruptcy, investors usually lose all of their funds.

Geoffrey G. Nathan, Esq.

About Geoffrey G. Nathan, Esq.

You need a highly experienced federal criminal defense lawyer such as attorney Geoffrey Nathan who produces results due to his national profile and representation in the nation's most significant federal indictments: operation iron triangle, crossfire hurricane, operation varsity blues. Due to his reputation for excellence Attorney Nathan as a pure defense lawyer is available to consult with you and can explain how the is able to work within your budget.. For national consultations, call 1.877.472.5775.