My Big Coin virtual currency firm founder convicted of fraud

July 21, 20228:42 PM UTCUpdated ago

Cryptocurrency miners are seen in a liquid immersion cooling mining tank at the TMG Core stand during the Bitcoin Conference 2022 in Miami Beach, Florida, U.S. REUTERS/Marco Bello

Summary
Related documents

Boston federal jury finds My Big Coin Inc founder Randall Crater guilty
Related CFTC lawsuit led to key ruling on cryptocurrency enforcement

(Reuters) - The founder of a defunct cryptocurrency business was convicted on Thursday of charges that he defrauded investors and customers out of millions of dollars through lies and false claims that its virtual currency My Big Coin was backed by $300 million in gold.

A federal jury in Boston found Randall Crater, 51, guilty of committing wire fraud and making unlawful monetary transactions in a prosecution that spilled out of a precedent-setting case by the U.S. Commodity Futures Trading Commission.

The CFTC's lawsuit against Crater and his failed company, Nevada-based My Big Coin Inc, led to one of the first court rulings holding that a virtual currency could be considered a commodity within the regulator's jurisdiction.

The East Hampton, New York, resident faces sentencing by U.S. District Judge Denise Casper on Oct. 27.

Crater's lawyer, Scott Lopez of Lawson & Weitzen, did not respond to a request for comment. He has said Crater did nothing wrong and that investors and purchasers of My Big Coin were well aware of the risks inherent in virtual currencies.

"Failing to launch a successful start-up, particularly in the volatile world of cryptocurrency, the evidence will show is not a crime," Lopez said in his opening statement on July 12.

Federal prosecutors secured Crater's indictment in 2019, a year after the CFTC sued him, amid rising concerns about fraud in the cryptocurrency space.

More than 46,000 people reported losing over $1 billion in cryptocurrency scams from January 2021 through March 2022, the Federal Trade Commission said in June, a number the agency said likely reflected a vast undercount.

Prosecutors said Crater from 2014 to 2017 defrauded investors and customers by falsely claiming that My Big Coin was backed by $300 million in gold and could be bought and sold on a virtual exchange.

Assistant U.S. Attorney Christopher Markham told jurors in his opening statement at trial that those claims were "made up," as were Crater's representations about a partnership with MasterCard.

The name of his virtual currency, My Big Coin, sounded similar to the widely popular virtual currency bitcoin. Yet Markham said My Big Coin "was not even a real cryptocurrency" like bitcoin as it lacked a blockchain tracing the transactions.

All told, 40 people were defrauded out of $6 million, money Crater used on cars, jewelry, artwork and antique coins, prosecutors said.

Lopez countered that Crater's statements reflected real plans that simply did not come to fruition for his cryptocurrency company, which he hoped would solve banking challenges for marijuana businesses.

The case is U.S. v. Crater, U.S. District Court, District of Massachusetts, No. 19-cr-10063.

For the United States: Christopher Markham and Babasijibomi Moore of the U.S. Department of Justice

For Crater: Scott Lopez of Lawson & Weitzen

U.S. charges My Big Coin virtual currency firm founder with fraud

U.S. judge sides with CFTC on virtual currency oversight

U.S. agency's virtual currency oversight faces court challenge

(NOTE: This article has been updated to correct the spelling of Christopher Markham's last name.)