From financemagnates by Damian Chmiel

Two separate digital asset fraud schemes have resulted in the US federal court orders requiring perpetrators to pay over $9.1 million in restitution to defrauded victims, the Commodity Futures Trading Commission (CFTC) announced yesterday (Monday).

“My Big Coin” Founder Faces $7.6M Bill in Crypto Fraud Case

In the larger of the two cases, Randall Crater of Heathrow, Florida, was ordered by the SUS District Court for the District of Massachusetts to pay $7.6 million in restitution for operating a fraudulent virtual currency scheme called My Big Coin (MBC).

Crater, who is currently serving an eight-year prison sentence, misled investors with false claims about MBC's value and gold backing, using customer funds to purchase luxury items including fine art, jewelry, and real estate.

Crater's deception extended beyond mere misrepresentation. Court documents reveal he used the misappropriated $7.6 million to fund a lavish lifestyle, purchasing a home, antiques, fine art, jewelry, and various luxury items.

The case, which involved several co-defendants, including Mark Gillespie and My Big Coin Pay, Inc., resulted in an eight-year prison sentence for Crater following a guilty verdict on charges of wire fraud, unlawful monetary transactions, and operating an unlicensed money-transmitting business.

Bitcoin Trading Promise Leads to $1.5M Court Order

In a separate case, the US District Court for the Eastern District of New York ordered Rashawn Russell to pay more than $1.5 million in restitution for operating a fraudulent digital assets trading scheme.

Russell solicited investments in bitcoin and ether for a purported proprietary trading fund between November 2020 and August 2022, misappropriating customer assets for personal expenses and gambling-related activities.

He also engaged in Ponzi-like behavior, using new investments to make payments to existing customers. Russell's scheme unraveled, leading to a guilty plea on wire fraud charges and a separate count of access device fraud.

CFTC Wins $9.1 Million Judgment Against Crypto Fraud Duo

Both court orders include permanent injunctions barring the defendants from CFTC-regulated markets. Russell, who is serving a three-year prison sentence, is additionally banned from trading for himself for eight years.

However, the CFTC cautioned that restitution orders may not guarantee recovery of lost funds due to potential insufficient assets of the wrongdoers.

For CFTC, this marks another crypto-related case this year. In January, a federal court in Florida ordered Mosaic Exchange Ltd and its CEO, Sean Michael, to pay more than $1.1 million in penalties and restitution. According to court documents, they operated a fraudulent digital asset trading scheme that targeted investors across multiple countries.

About a month ago, cryptocurrency exchange Gemini—owned by the Winklevoss twins—agreed to a $5 million settlement to resolve a lawsuit with the CFTC. The lawsuit alleged that Gemini provided misleading information to regulators in order to launch a Bitcoin futures contract. This settlement was reached shortly before the case was scheduled to go to trial.

In December, a federal court required five individuals associated with Icomtech to pay over $5 million in penalties for orchestrating a digital asset fraud scheme affecting nearly 200 investors worldwide.