Nevada-based company in Trouble as CFTC Files Fraud Charges for Cryptocurrency Scam
Commodity Futures Trading Commission (CFTC) - the U.S regulatory watchdog said on Wednesday that it has filed charges of fraud and misappropriation against the Nevada-based company ‘My Big Coin Pay Inc.’ alleging a cryptocurrency scam in a series of cases.
Randall Crater, the company’s founder and Mark Gillespie who solicited customers on the company’s behalf have been accused by the CFTC for misappropriating funds worth $6 million from customers who were looking to buy the cryptocurrency ‘My Big Coin’.
The CFTC is said to have filed a criminal complaint in Massachusetts district court. The complaint shows how the company sold digital currency named ‘My Big Coin’ as a part of ICO which allows its customers to live a lavish lifestyle including entertainment, travel, jewelry purchases and “much more across the world.”
$6 million amount was raised from 28 customers with misleading and false claims about their cryptocurrencies being backed by gold assets and partnered with MasterCard, where nothing of that sort exists, says CFTC.
Citing the transfer of funds received through ICO into other accounts, the agency has received an emergency asset order. CFTC also said that monetary payouts to its customers using funds obtained from other customers sighting the existence of a Ponzi scheme.
My Big Coin Pay Inc. was founded in December 2013. It is basically a virtual currency platform and wallet which allows consumers and merchants to process transactions using its own digital currency.
Director of Enforcement James McDonald, stated: “As this case shows, the CFTC is actively policing the virtual currency markets and will vigorously enforce the anti-fraud provisions of the Commodity Exchange Act. 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.”
The lawsuit arises amidst growing concerns around the world about the risks that cryptocurrencies pose to gullible investors and the financial system in general. While defending the company on the lawsuit, Adam Tracy, a lawyer for the company, said: “the allegations contained in the CFTC’s complaint are just that, allegations, and I’ll be working with client in coming days to formulate a response to the complaint.”
The ICO market that was on fire in the first half of 2017 lost its steam somehow in the second half of the year. Moreover, there have been multiple cases of fraud and phishing being reported during last year. As per the latest report released by Ernst and Young around $400 million were reportedly being stolen or lost out of a total $3.7 billion being raised in 2017.