By Reuters | Updated: 1 February 2023
The founder of a defunct cryptocurrency business was sentenced on Tuesday to more than eight years in prison for defrauding investors and customers out of millions of dollars by marketing a virtual currency called My Big Coin with lies and half-truths.
Federal prosecutors had urged US District Judge Denise Casper in Boston to impose a 13-year prison term on Randall Crater to send a message to others in the first sentencing of a cryptocurrency company founder for marketing fraud.
While Casper concluded that that request went too far, she rejected Crater’s contention that a 30-month prison term was sufficient to punish him for his false claims, including that My Big Coin was a real cryptocurrency backed by gold.
“Certainly cryptocurrency is a newer enterprise, a newer market, a 21st Century market,” Casper said. “But the scheme at its core was age-old, and that was fraud.”
Crater, who was sentenced to 100 months in total and ordered to forfeit nearly $7.7 million (roughly Rs. 63 crore), is expected to appeal. In court, he apologized but said he never meant to defraud anyone.
“I did not set out to steal money from anyone,” he said. “That does not mean I am not remorseful.”
A jury in July found Crater, 52, guilty of committing wire fraud and making unlawful monetary transactions in a prosecution that spilled out of a precedent-setting case by the US Commodity Futures Trading Commission.
The CFTC’s 2018 lawsuit against Crater and his failed company, Nevada-based My Big Coin, led to one of the first court rulings holding that a virtual currency could be considered a commodity within the regulator’s jurisdiction.
Prosecutors subsequently secured Crater’s indictment in 2019 and accused him of causing investors and customers to lose $7.5 million (roughly Rs. 61 crore) from 2014 to 2017 with lies about My Big Coin, whose name sounded similar to the popular virtual currency bitcoin.
Prosecutors said those false claims included that My Big Coin was a real virtual currency, was backed by gold, and had a partnership with MasterCard. Prosecutors said he used the money to buy cars, jewelry, artwork and antique coins.
© Thomson Reuters 2023
