CFTC Targets Multi-Million Dollar Cryptocurrency Fraud with Multiple Suits


In line with its expressed intent to increase its oversight over the cryptocurrency market, the Commodity Futures Trading Commission has filed three related fraud suits in a single week.

The third lawsuit targets the creators of “My Big Coin,” who allegedly used $6 million dollars received from buyers to pay off early investors and shop for luxury items. The allegations caused the freezing of all assets belonging to the creators of the supposed next-big-cryptocurrency.

The Nevada-based company, My Big Coin Pay Inc.; was founded by Randall Crater. The suit, filed in January, also named one of its salesmen, Mark Gillespie. According to the allegations, between 2014 and mid-2017, the defendants defrauded 28 investors out of six million dollars.

There is nothing wrong with creating cryptocurrency and marketing it. But My Big Coin advertised its product as being accepted as widely as a Mastercard, gold-backed, and coveted in markets worldwide. In fact, according to the CFTC, My Big Coin wasn´t traded on any established exchanges and its prices were a mere fabrication.

Crater was not shy at marketing My Big Coin; he promoted it with YouTube videos and poor quality press releases, targeting perhaps a cash-thirsty, yet little-informed audience. Crater´s predictions that the price of My Big Coin would skyrocket were enough to convince some unwitting investors, including several based in Massachusetts.

The proceeds of My Big Coin sales were allegedly used by Crater´s family members to purchase real estate, collectible art, and other luxury items. Over half a million dollars were withdrawn from banks and ATMs. Several relatives of Crater were also mentioned in the suit.

In its complaint, the CFTC referred to My Big Coin´s promised results as “illusory,” and to the whole business as a “Ponzi scheme.”

The suit will likely have a sobering effect on a largely unregulated market. The CFTC´s Enforcement Chief, James McDonald, made this all the more clear in a statement:

“The CFTC is actively policing the virtual currency markets and will vigorously enforce the anti-fraud provisions of the Commodity Exchange Act… In addition to harming customers, fraud in connection with virtual currencies inhibits potentially market-enhancing developments in this area.”

Bitcoin´s price can rise astronomically; most spectacularly, it recently went from $1,000 to $11,000 over a short period of time. This attracts a lot of attention, and it can often inspire fraudsters to try to “make it big” with a made-up cryptocurrency marketed as “the next Bitcoin.”

But now the CFTC is watching.

The first time the Commission filed a cryptocurrency fraud suit was in September, 2017. Since then, the regulator´s quest for increasing oversight has only escalated, and it will, no doubt, continue to do so.

If you are facing a CFTC cryptocurrency action, it is important to act fast and prepare your defense – early intervention can make all the difference. However, if you are already embroiled in a CFTC battle, we can also help. The Herskovits PLLC team focuses exclusively on securities law defense and our cryptocurrency team is tracking the rules, the interpretations, and the realities for clients nationwide. Call now to learn your rights and options. 212.897.5410  or CONNECT ONLINE

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