Randall Crater, the creator of purported cryptocurrency My Big Coin, has been convicted for stealing over $6 million from investors by falsely claiming that this new crypto asset was backed by commodities.
The Department of Justice said Crater, 51, offered virtual payment services through his fraudulent digital currency. (Related: "Cryptoqueen" becomes first crypto criminal on FBI's top 10 most wanted.)
My Big Coins were marketed to investors between 2014 and 2017. Crater and his associates falsely claimed that the cryptocurrencies were backed by $300 million in gold, oil and other assets. They also falsely marketed themselves to potential investors by claiming that My Big Coin had a partnership with MasterCard and that the coins could easily be exchanged for other virtual currencies or even fiat currency.
Over the course of this scheme, Crater pocketed over $6 million from 40 investors. The Justice Department said Crater used a lot of this money on cars, jewelry, artwork and antiques.
Crater found guilty for wire fraud, money laundering and operating an unlicensed business
Crater and My Big Coin first came under investigation in 2018, when the Commodity Futures Trading Commission (CFTC) charged both for commodity fraud and also filed civil charges against Crater and two of his associates.
This precedent-setting case led to one of the first court rulings which noted that a virtual currency could be considered a commodity within the CFTC's jurisdiction.
A year following the CFTC's lawsuit, federal prosecutors once again brought Crater to court amid rising concerns about the prevalence of fraud in the cryptocurrency market.
Following a long trial, a jury in the U.S. District Court in Boston returned a guilty verdict against Crater. He was convicted on four counts of wire fraud, three counts of money laundering and one count of operating an unlicensed money transmitting business.
Crater faces up to 10 years in prison for each count of money laundering, up to 20 years for each count of wire fraud and up to five years for operating an unlicensed money transmitting business. His sentencing hearing has been scheduled for Oct. 27.
Scott Lopez of the law firm Lawson & Weitzen, which represented Crater, has not responded to requests for comments following his client's conviction. But in previous statements, Lopez claimed that Crater did nothing wrong and that the investors and purchasers of My Big Coin were aware of the risks that came with investing in cryptocurrencies.
"Failing to launch a successful start-up, particularly in the volatile world of cryptocurrency, the evidence will show, is not a crime," said Lopez in his opening statement at the beginning of the trial on July 12.
Assistant U.S. Attorney Christopher Markham, in his opening statement, said Crater's claim that his business venture is legitimate is "made up," as were his representations about his alleged partnership with MasterCard.
Throughout the trial, Lopez asserted that Crater's statements regarding My Big Coin reflected real plans that simply did not come to fruition.
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