A federal jury has convicted the founder of cryptocurrency company My Big Coin of cheating investors out of more than $6 million by selling them a phony virtual currency.
The U.S. Department of Justice said Thursday (July 21) that the jury convicted Randall Crater, 51, of East Hampton, New York, of four counts of four counts of wire fraud, three counts of money-laundering and one count of operating an unlicensed money transmitting business.
According to a department news release, Crater and his associates told investors that their coins were a fully functioning cryptocurrency backed by $300 million in gold, oil and other assets, and that his company had a partnership with MasterCard.
“In reality, coins were not backed by gold or other valuable assets, did not have a partnership with MasterCard and were not readily transferable,” the release said. “Over the course of the scheme, Crater misappropriated over $6 million of investor funds for his own personal gain, including spending hundreds of thousands of dollars on antiques, artwork and jewelry.”
In January 2018, the Commodity Futures Trading Commission (CFTC) announced commodity fraud charges against Crater and My Big Coin Pay Inc, as well as civil charges against a number of company executives.
Read more: Feds Charge 3 in First-Ever Crypto Insider Trading Case
Crater’s attorney was not immediately available for comment.
Ray Chandler, a lawyer who represented Crater when he was arrested in 2019, said at the time that there were “dozens and dozens of documents available that show Mr. Crater made every effort to create a viable virtual currency.”
Crater is set to be sentenced Oct. 27 and faces up to 10 years in prison on each money laundering conviction and up to 20 years for each wire fraud count.
Carter’s conviction came on the same day that federal authorities announced changes in what they said was the first-ever insider trading case involving cryptocurrencies.
Ishan Wahi, a one-time product manager at Coinbase, is accused of funneling confidential trade information to his brother Nikhil Wahi and his associate Sameer Ramani.
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