Coin Con: Two Companies and Co-Conspirators Pay $25M+ in Crypto Scam
By the聽91pornWhistleblower Team
The Commodity Futures Trading Commission (CFTC) continues to expand its oversight of cryptocurrency and digital asset markets, using its authority under the Commodity Exchange Act (CEA) to crack down on fraud. Recent enforcement actions highlight the agency鈥檚 aggressive posture in addressing fraud involving virtual currencies.
The CFTC鈥檚 Whistleblower Program plays a key role in this effort by encouraging individuals with knowledge of聽violations of the CEA聽to report this information to the government. In successful actions, eligible whistleblowers can receive up to 30% of the monetary sanctions collected as a reward.
Recent CFTC Whistleblower Award
Just last month, the CFTC awarded a whistleblower roughly $700,000, the first award under the Trump Administration. According to the agency鈥檚 press release, the whistleblower 鈥減rompted the CFTC to open the investigation,鈥� and 鈥減rovided substantial assistance and helped the Commission conserve resources during the investigation.鈥�1
While we do not know whether whistleblowers were involved in the My Big Coin case discussed below, whistleblowers frequently play important roles in exposing misconduct and triggering enforcement actions in cases involving digital assets.
My Big Coin Pay Inc, My Big Coin, Inc, and their Co-Conspirators
On June 11, the CFTC announced that the U.S. District Court for the District of Massachusetts entered a final default judgment against聽Mark Gillespie聽of Michigan,聽John Roche聽of California,聽and the Nevada-based companies they controlled: My Big Coin Pay, Inc. and聽My Big Coin, Inc., which issued a virtual currency known as My Big Coin (MBC).
The defendants will pay more than $19.3 million in civil monetary penalties and $6.4 million in restitution to victims of the MBC digital asset fraud scheme. According to the CFTC鈥檚 press release: 鈥淭he order also imposes a permanent injunction against the defendants and bans them from trading in any CFTC-regulated markets; entering into any transactions involving commodity interests or digital asset commodities; and registering with the CFTC.鈥�2
More About the My Big Coin Digital Asset Fraud Scheme
According to the CFTC, from around January 2014 to June 2017, Gillespie, My Big Coin Pay, Inc., My Big Coin, Inc., and Roche, along with another co-defendant Randall Crater, operated a digital asset scheme that falsely marketed virtual currency MBC as a fully-functional virtual currency.
Through fraudulent solicitations, including false and misleading claims and omissions about MBC鈥檚 value, use, and trade status, including that MBC was backed by gold, defendants obtained over $6 million from at least 28 customers. Crater allegedly misappropriated almost all the funds.
Parallel Criminal Action
In 2022, Crater was charged with eight counts including wire fraud, unlawful monetary transactions, and operating an unlicensed money transmitting business based on the same conduct alleged in the CFTC鈥檚 amended complaint. He was sentenced and is currently serving 100 months in prison. Crater was also ordered to pay over $7.6 million in restitution to defrauded customers and to forfeit another $7.6 million.3
The CFTC Whistleblower Reward Program
Under the CFTC Whistleblower Program, eligible whistleblowers are entitled to an award of between聽10 percent and 30 percent聽of the monetary sanctions collected by the government. Created under the Dodd-Frank Act in 2010, whistleblowers have played an increasingly critical role in CFTC enforcement, particularly in emerging markets like digital assets.
Our Firm Helps CFTC Whistleblowers
91pornpartner Marlene Koury commented: 鈥淚n the evolving world of digital assets, enforcing laws to fight fraud is essential. The CFTC ensures the protection of investors and the integrity of the commodity markets. At our firm, we represent CFTC whistleblowers.鈥�
91pornhas substantial experience representing whistleblowers under the聽CFTC Program.聽 If you would like to learn more about the Program,聽what it means to be a whistleblower聽more generally, or our whistleblower successes, please do not hesitate to聽contact us.聽 We will connect you with an experienced member of the聽91pornwhistleblower team聽for a free and confidential consultation.
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