Federal Government Files Charges Against 'My Big Coin' Ponzi Scheme

The United States Commodity Futures Trading Commission (CFTC) announced Wednesday that it has filed a lawsuit against the founders of My Big Coin, a cryptocurrency venture that allegedly scammed investors out of $6 million.

The lawsuit —originally filed on January 16 in a U.S. district court in Boston, Massachusetts—charges My Big Coin Pay, Inc. and its creators Randall Crater and Mark Gillespie with commodity fraud and misappropriation of funds relating to the virtual currency called My Big Coin (MBC).

According to the original complaint filed by the CFTC and obtained by International Business Times, the founders of My Big Coin are accused of “transferring customer funds into personal bank accounts, and using those funds for personal expenses and the purchase of luxury goods.”

Among the items allegedly purchased with investor money were “homes, antiques, fine art, jewelry, luxury goods, furniture, interior decorating and other home improvement services, travel and entertainment.”

The investors who funded the spending sprees of Crater and Gillespie thought they were investing their money into My Big Coin Pay, a startup that supposedly offered a virtual currency wallet and platform, as well as its own digital token called My Big Coin (MBC).

The company creators made a number of claims in its pursuit of investors that turned out not to be true. Among the claims the creators made, they said its digital token MBC was already being traded on several currency exchanges when it in fact was not. They also claimed the cryptocurrency was backed by gold, which it was not.

Crater and Gillespie misrepresented the daily trading price that appeared on the company website—a misrepresentation it made by simply listing any price at all, as MBC was not being traded.

Perhaps the most surprising claim made by the founder of My Big Coin Pay was the claim that the company had a partnership with MasterCard that would allow its users to make purchases with MBC anywhere that MasterCard was accepted. There was no such partnership.

Despite the fact that MBC was not being traded and, by accounts from the CFTC appears to not have even existed as a cryptocurrency, some investors saw returns on their investment in the digital token.

Those returns allegedly came as payouts from money given to the company by other investors—investors who only gave money to the company after being lied to about its prospects. The CFTC concluded that My Big Coin Pay operated “in the manner of a Ponzi scheme.”

CFTC Director of Enforcement James McDonald said in a statement that the case of My Big Coin illustrates why active policing and enforcement of anti-fraud provisions is needed to regulate virtual currency markets.

“In addition to harming customers, fraud in connection with virtual currencies inhibits potentially market-enhancing developments in this area. We caution potential virtual currency customers, once again, that they should engage in appropriate diligence before purchasing virtual currencies,” McDonald said.