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"My Big Coin" Virtual Currency CFTC Enforcement Action

“My Big Coin” Virtual Currency CFTC Enforcement Action

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Randall Crater, Mark Gillespie, and My Big Coin Pay, Inc. Charged by Commodities Futures Trading Commission (“CFTC”) with Fraud and Misappropriation in Ongoing Virtual Currency Scam

Virtual Currency Investors Allegedly Solicited for More Than $6 million for Investments in “My Big Coin”

The CFTC announced the filing of a federal court enforcement action under seal on January 16, 2018, charging commodity fraud and misappropriation related to the ongoing solicitation of customers for a virtual currency known as “My Big Coin.”

CFTC v. My Big Coin Pay, Inc., et al. and Kimberly Renee Benge, et al (No. 18-10077)

The CFTC Complaint charged Defendants Randall Crater of East Hampton, New York; Mark Gillespie of Hartland, Michigan; and My Big Coin Pay, Inc., a Las Vegas, Nevada-based corporation (“My Big Coin Pay Defendants” or “Defendants”), with misappropriating over $6 million from customers by, among other things, transferring customer funds into personal bank accounts, and using those funds for personal expenses and the purchase of luxury goods.

According to the CFTC’s complaint:

From at least January 2014 through January 2018, the My Big Coin Pay Defendants fraudulently solicited potential and existing My Big Coin customers throughout the United States by making false and misleading claims and omissions about My Big Coin’s value, usage, and trade status, and that My Big Coin was backed by gold. The My Big Coin Defendants also, allegedly, fraudulently solicited numerous customers in the District of Massachusetts, receiving in excess of $5 million from those customers.

Further, the My Big Coin website, maintained and operated by the Defendants, conveyed to customers numerous solicitation materials, My Big Coin trade data, and other materials 1) misrepresenting that My Big Coin was actively being traded on several currency exchanges, including the My Big Coin Exchange website, when, in fact, it was not; 2) misrepresenting in reports the daily trading price, when, in fact, no price existed, because My Big Coin was not trading; 3) misrepresenting that My Big Coin was backed by gold, when, in fact, it was not; and 4) misrepresenting that My Big Coin had partnered with MasterCard, with the promise that My Big Coin could be used anywhere MasterCard was accepted, when, in fact, no such partnership existed, and My Big Coin could not be used anywhere MasterCard was accepted.

The supposed trading results, allegedly, were illusory, and any payouts to customers were derived from funds fraudulently obtained from other customers in the manner of a Ponzi scheme.

As customers began to raise questions about their My Big Coin accounts, Defendants attempted to conceal their fraud by issuing additional coins to customers and falsely representing that they had secured a deal with another exchange to trade My Big Coin, according to the CFTC’s complaint. The Defendants allegedly encouraged customers to refrain from redeeming their My Big Coin holdings until My Big Coin was active on this “new” exchange.

The Defendants Misappropriated Funds Used for Personal Purchases, Including a Home, Jewelry & Travel

As alleged in the CFTC complaint, Defendants misappropriated virtually all of the approximately $6 million they solicited from customers. Defendants allegedly used these misappropriated funds to purchase a home, antiques, fine art, jewelry, luxury goods, furniture, interior decorating and other home improvement services, travel, and entertainment.

United States District Court Issues Restraining Order Freezing Assets and Protecting Books and Records

According to the CFTC, on January 16, 2018, a restraining Order, also under seal, was issued freezing the virtual currency Defendants’ assets. The federal judge’s Order also froze the assets of Relief Defendants Kimberly Renee Benge, Kimberly Renee Benge d/b/a Greyshore Advertisement a/k/a Greyshore Advertiset, Barbara Crater Meeks, Erica Crater, Greyshore, LLC, and Greyshore Technology, LLC for allegedly receiving customer funds without providing any legitimate services to clients and without any interest or entitlement to such customer funds. The court’s restraining Order also prohibits the Defendants and Relief Defendants from destroying or altering books and records.

My Big Coin Virtual Currency Investors

My Big Coin investors should be aware that the CFTC, in its continuing litigation, seeks civil monetary penalties, restitution, rescission, disgorgement of ill-gotten gains, trading and registration bans, and permanent injunctions against further violations of the federal commodities laws, as charged.

Virtual Currency Enforcement Action by CFTC Against My Big Coin Pay, Inc. and Others

Image: Bitcoin; Wikimedia Commons (https://en.bitcoin.it/wiki/Promotional_graphics); CC BY-SA 3.0

Virtual Currency Investors

Please click Kehoe Law Firm, P.C. for more information about cryptocurrencies, Initial Coin Offerings, and other class action investigations.

Bitcoin and other virtual currency/cryptocurrency investors are also encouraged to review the following SEC and CFTC cryptocurrency- and Initial Coin Offering-related information:

SEC Chairman Jay Clayton Statement on Cryptocurrencies and Initial Coin Offerings (Dec. 11, 2017)

SEC Division of Enforcement and SEC Office of Compliance Inspections and Examinations Statement on Potentially Unlawful Promotion of Initial Coin Offerings and Other Investments by Celebrities and Others (Nov. 1, 2017)

Investor Alert: Public Companies Making ICO-Related Claims (Aug. 28, 2017)

Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO (July 25, 2017)

Investor Bulletin: Initial Coin Offerings (July 25, 2017)

Investor Alert: Bitcoin and Other Virtual Currency-Related Investments (May 7, 2014)

Investor Alert: Ponzi Schemes Using Virtual Currencies (July 23, 2013)

CFTC Customer Advisory: Understand the Risks of Virtual Currency Trading (December 15, 2017)

A CFTC Primer on Virtual Currencies (October 17, 2017)

Source: CFTC.gov, SEC.gov

Kehoe Law Firm, P.C.