Two
separate digital asset fraud schemes have resulted in the US federal court
orders requiring perpetrators to pay over $9.1 million in restitution to
defrauded victims, the Commodity Futures Trading Commission (CFTC) announced yesterday
(Monday).
“My Big Coin” Founder
Faces $7.6M Bill in Crypto Fraud Case
In the
larger of the two cases, Randall Crater of Heathrow, Florida, was ordered by
the SUS District Court for the District of Massachusetts to pay $7.6 million in
restitution for operating a fraudulent virtual currency scheme called My Big
Coin (MBC).
Crater, who
is currently serving an eight-year prison sentence, misled investors with false
claims about MBC’s value and gold backing, using customer funds to purchase
luxury items, including fine art, jewelry, and real estate.
Federal Court Orders Florida Man to Pay Over $7.6 Million for Digital Asset Fraud: https://t.co/DpTXEDmpJO
— CFTC (@CFTC) February 10, 2025
Crater’s
deception extended beyond mere misrepresentation. Court documents reveal he
used the misappropriated $7.6 million to fund a lavish lifestyle, purchasing a
home, antiques, fine art, jewelry, and various luxury items.
The case,
which involved several co-defendants, including Mark Gillespie and My Big Coin
Pay, Inc., resulted in an eight-year prison sentence for Crater following a
guilty verdict on charges of wire fraud, unlawful monetary transactions, and
operating an unlicensed money-transmitting business.
Bitcoin Trading Promise
Leads to $1.5M Court Order
In a
separate case, the US District Court for the Eastern District of New York
ordered Rashawn Russell to pay more than $1.5 million in restitution for
operating a fraudulent digital assets trading scheme.
Russell
solicited investments in Bitcoin and Ether for a purported proprietary trading
fund between November 2020 and August 2022, misappropriating customer assets
for personal expenses and gambling-related activities.
Federal Court Orders New York Resident to Pay Over $1.5 Million in Digital Assets Trading Scheme: https://t.co/P74AiTud65
— CFTC (@CFTC) February 10, 2025
He also
engaged in Ponzi-like behavior, using new investments to make payments to
existing customers. Russell’s scheme unraveled, leading to a guilty plea on
wire fraud charges and a separate count of access device fraud.
CFTC Wins $9.1 Million
Judgment Against Crypto Fraud Duo
Both court
orders include permanent injunctions barring the defendants from CFTC-regulated
markets. Russell, who is serving a three-year prison sentence, is additionally
banned from trading for himself for eight years.
However,
the CFTC cautioned that restitution orders may not guarantee recovery of lost
funds due to potential insufficient assets of the wrongdoers.
For the CFTC, this
marks another crypto-related case this year. In January, a federal court in
Florida ordered Mosaic Exchange Ltd and its CEO, Sean Michael, to pay more than
$1.1 million in penalties and restitution. According to court documents, they
operated a fraudulent digital asset trading scheme that targeted investors
across multiple countries.
About a
month ago, cryptocurrency exchange Gemini—owned by the Winklevoss twins—agreed
to a $5 million settlement to resolve a lawsuit with the CFTC. The lawsuit
alleged that Gemini provided misleading information to regulators in order to
launch a Bitcoin futures contract. This settlement was reached shortly before
the case was scheduled to go to trial.
In
December, a federal court required five individuals associated with Icomtech to
pay over $5 million in penalties for orchestrating a digital asset fraud scheme
affecting nearly 200 investors worldwide.
This article was written by Damian Chmiel at www.financemagnates.com.
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