Randall Crater, the owner of My Big Coin Pay Inc was arrested and charged in an indictment filed in a federal court in Boston with seven counts of wire fraud and unlawful monetary transactions. The crypto scam reportedly defrauded at least 28 people out of $6 million. The enforcement action described My Big Coin as a classic Ponzi scheme.
My Big Coin apparently allowed for the “anonymous exchange of currency.” Instead of using investor funds as promised, Crater plundered the $6 million for his personal use, buying jewellery, artwork and close to £1,000,000 worth of antiques.
Between 2014 and 2017, Crater and others created the fraudulent digital tokens, named MBC, and marketed them to people claiming that the coins were backed by gold and partnered with MasterCard. In an email in 2015, Crater told an investor that “we have 300 million in gold backing us,” the indictment said.
Coins Not Backed By Gold Or Any Other Asset
The indictment came after the US Commodity Futures Trading Commission (CFTC) sued Crater and three others associated with My Big Coin Pay Inc last year, accusing them of fraud and misappropriation. The CFTC alleged that the MBC website made false statements to prospective investors, as well as misrepresentation that the coin was gold-backed, when it was no more than imaginative words on their website. That lawsuit led to one of the first court rulings holding that cryptocurrencies could be considered a commodity under US law and are subject to the Commodity Exchange Act.
The indictment reads: “In reality, Coins were not backed by gold or other assets, were not readily exchangeable virtual currency, and had little to no actual value. Rather, Crater misappropriated more than $6 million of investor money for personal use”.
My Big Coin’s website is unavailable, and they last tweeted to their 266 thousand followers on February 14, posting a link to an article about JP Morgan Chase’s JPM Coin.
Crater has denied the allegations