CFTC Secures Over $9.1 Million in Restitution for Digital Asset Fraud Victims

CFTC Cracks Down on Cryptocurrency Fraud Schemes

The Commodity Futures Trading Commission (CFTC) has successfully secured federal court orders requiring over $9.1 million in restitution for victims of two separate digital asset fraud schemes. These actions underscore the agency's ongoing efforts to combat fraud in the cryptocurrency space.

First Case: My Big Coin Scheme

In the first case, Randall Crater, founder of the virtual currency scheme My Big Coin (MBC), was ordered to pay $7.6 million in restitution. Crater, currently serving an eight-year prison sentence, was found guilty of falsely claiming that MBC was backed by gold. He misused the misappropriated funds to finance a lavish lifestyle, including purchasing luxury items such as real estate, antiques, and fine art. Co-defendants Mark Gillespie and My Big Coin Pay, Inc. faced charges including wire fraud, unlawful monetary transactions, and operating an unlicensed money-transmitting business.

Second Case: Rashawn Russell's Fraudulent Trading Operation

In a separate case, Rashawn Russell was ordered to pay over $1.5 million in restitution for operating a fraudulent digital assets trading operation. Russell solicited investments in bitcoin and ether, falsely claiming to have a proprietary trading fund. Instead, he misused customer assets for personal expenses, gambling, and engaged in Ponzi-like behavior by paying existing customers with new investments. Russell pleaded guilty to wire fraud and access device fraud, receiving a three-year prison term and an eight-year ban from trading for himself.

Ongoing CFTC Enforcement Actions

Both court orders include permanent injunctions preventing the defendants from participating in CFTC-regulated markets. The CFTC has warned that recovery of lost funds is not guaranteed, as perpetrators may lack sufficient assets to fulfill restitution orders.

These cases are part of a series of enforcement actions by the CFTC against crypto-related fraud. Earlier this year, a federal court in Florida ordered Mosaic Exchange Ltd and its CEO to pay over $1.1 million for operating a fraudulent digital asset trading scheme. Additionally, cryptocurrency exchange Gemini recently settled with the CFTC for $5 million over allegations of providing misleading information to regulators. In December, individuals associated with Icomtech were required to pay over $5 million in penalties for a digital asset fraud scheme affecting nearly 200 global investors.

The CFTC's continued focus on combating cryptocurrency fraud highlights the importance of regulatory oversight in the digital asset space.