My Big Coin Fraudulent Service: Difference between revisions

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(COMPLETE 30 minutes. Reviewed the wiki article in further detail. Confirmed that this scheme continued to be promoted into 2017, and the true date of ending it should be later in 2017. 2015 is only the date of one of the promotions. Expanded the sources to be used, and added more information on the trial and convictions to the timeline.)
 
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{{Imported Case Study 2|source=https://www.quadrigainitiative.com/casestudy/mybigcoinfraudulentservice.php}}
{{Case Study Under Construction}}{{Unattributed Sources}}
{{Unattributed Sources}}


[[File:Mybigcoin.jpg|thumb|My Big Coin]]MyBigCoin operated a fraudulent company which made significant false claims, including a false partnership with Mastercard and being backed by gold. In the end, participants were receiving nothing, and $6m was lost without any opportunity of recovery.
[[File:Mybigcoin.jpg|thumb|My Big Coin Logo/Homepage]]MyBigCoin operated a fraudulent company which made significant false claims, including a false partnership with Mastercard and being backed by gold. In the end, participants were receiving nothing, and $6m was lost without any opportunity of recovery.<ref name="onyxgs-3142" /><ref name="reuters-3749" /><ref name="bu-3750" /><ref name="mybigcoinarchive-3751" /><ref name="youtube-3752" /><ref name="elliptic-2535" /><ref name="vocal-5675" /><ref name="comparitech-10032" /><ref>https://caselaw.findlaw.com/court/us-1st-circuit/115857853.html (Accessed Oct 28, 2024)</ref><ref>https://www.justice.gov/usao-ma/pr/founder-purported-cryptocurrency-company-sentenced-more-eight-years-prison-multi-million</ref><ref>https://www.reuters.com/technology/my-big-coin-cryptocurrency-firm-founder-gets-8-years-prison-fraud-2023-01-31/</ref><ref>https://www.reuters.com/legal/government/my-big-coin-virtual-currency-firm-founder-convicted-fraud-2022-07-21/</ref>
 
This exchange or platform is based in United States, or the incident targeted people primarily in United States.<ref name="onyxgs-3142" /><ref name="reuters-3749" /><ref name="bu-3750" /><ref name="mybigcoinarchive-3751" /><ref name="youtube-3752" /><ref name="elliptic-2535" /><ref name="vocal-5675" />


== About My Big Coin ==
== About My Big Coin ==
"Launched in 2013 by Randall Crater, My Big Coin started as a virtual currency wallet and platform that allowed merchants and consumers to process transactions with their own digital tokens."
My Big Coin was based in the United States in Nevada<ref name="reuters-3749" />. It was founded by Randall Crater<ref name="reuters-3749" /><ref name=":0">[https://www.justice.gov/opa/pr/my-big-coin-founder-convicted-cryptocurrency-fraud-scheme My Big Coin Founder Convicted of Cryptocurrency Fraud Scheme - Department Of Justice] (Accessed Oct 28, 2024)</ref>. "Launched in 2013 by Randall Crater, My Big Coin started as a virtual currency wallet and platform that allowed merchants and consumers to process transactions with their own digital tokens."
 
"Rather than use investor funds as promised, Crater misappropriated $6 million for his personal uses, such as buying artwork, antiques and jewelry, the indictment said."
 
"In 2018 it was discovered the company had been scamming people out of their hard-earned money. In exchange for their dollars, unlucky customers were getting nothing. A company that purported to be selling legitimate Bitcoin was selling air."
 
"My Big Coin managed to stay in business for a long time without being discovered because of pretending to be a legitimate business. It even claimed to be partnering with MasterCard. Over the cause of its operation, the company lured investors into funding around $6 million."
 
"Mr. Crater was later arrested and charged with fraud and misappropriation. My Big Coin lawsuit became one of the first in American history that revealed a cryptocurrency could be considered a commodity with the jurisdiction held by the U.S. derivatives regulator."
 
"The founder of a Nevada-based company was arrested on Wednesday on federal charges he participated in a $6 million scheme to defraud people who wanted to buy a virtual currency called My Big Coin that he claimed was backed by gold."
 
"My Big Coin Pay is a major decision that clarifies the scope of the CFTC’s regulatory authority over cryptocurrencies that do not include a futures component. However, several questions remain. First, the court held that the CFTC had met its burden at the pleadings stage, leaving open the possibility that My Big Coin may be found to not be a commodity in later proceedings.93 Second, the court did not attempt to reconcile its opinion with CFTC v. Monex Credit Co.’s holding that the language of Section 6(c)(1) “prohibited fraudulent manipulation
but not fraud without manipulation.”94 It remains to be seen whether My Big Coin Pay will be an isolated case or whether the CFTC will continue to play a meaningful role in keeping the cryptocurrency sector accountable."
 
This exchange or platform is based in United States, or the incident targeted people primarily in United States.
 
The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.
 
Include:
 
* Known history of when and how the service was started.
* What problems does the company or service claim to solve?
* What marketing materials were used by the firm or business?
* Audits performed, and excerpts that may have been included.
* Business registration documents shown (fake or legitimate).
* How were people recruited to participate?
* Public warnings and announcements prior to the event.
 
Don't Include:
* Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
* Anything that wasn't reasonably knowable at the time of the event.
There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.


== The Reality ==
== The Reality ==
This sections is included if a case involved deception or information that was unknown at the time. Examples include:
"In reality, Coins were not backed by gold or other valuable assets, did not have a partnership with MasterCard and were not readily transferable. Over the course of the scheme, Crater misappropriated over $6 million of investor funds for his own personal gain, including spending hundreds of thousands of dollars on antiques, artwork and jewelry."<ref name=":0" />


* When the service was actually started (if different than the "official story").
“CipherTrace’s investigation had revealed that MBC was not associated with a public blockchain and, therefore, lacked a crucial indicator of operating as a cryptocurrency until June 2017 -- long after Crater had marketed MBC as a virtual currency comparable to Bitcoin,” said the appellate filing<ref name=":1">[https://cointelegraph.com/news/appeal-rejected-my-big-coin-founder-verdict Appellate court rejects new trial for ‘My Big Coin’ founder - CoinTelegraph] (Accessed Oct 28, 2024)</ref>.
* Who actually ran a service and their own personal history.
* How the service was structured behind the scenes. (For example, there was no "trading bot".)
* Details of what audits reported and how vulnerabilities were missed during auditing.


== What Happened ==
== What Happened ==
Line 57: Line 19:
!Description
!Description
|-
|-
|September 3rd, 2015
|September 3rd, 2015 3:45:21 AM MDT
|Main Event
|YouTube Video Published
|Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.
|A YouTube video is shared which explains what My Big Coin is<ref name="youtube-3752" />.
|-
|-
|
|
|
|
|
|
|-
|February 27th, 2019 5:01:59 PM MST
|Reuters Reports Fraud Charges
|Reuters reports that the My Big Coin founder Randal Crater has been charged with fraud, which happened on the same day<ref name="reuters-3749" />.
|-
|July 21st, 2022 2:13:20 PM MDT
|US Department Of Justice Sentencing
|The US Department of Justice publishes a press release outlining their sentence for Randal Crater<ref name=":0" />.
|-
|February 26th, 2024 1:44:55 PM MST
|Court Of Appeals Upholds Original Conviction
|A CoinTelegraph article reports that three judges have upheld the original conviction of Randal Crater. "Crater’s legal team argued that the court violated his Sixth Amendment rights by not enforcing subpoenas against witnesses he claimed would help his case, and including testimony from a crypto expert he argued was unqualified — Pamela Clegg, vice president of financial investigations at blockchain intelligence firm CipherTrace. According to the judges, no argument by Crater’s counsel “merits reversal.” "<ref name=":1" />
|}
|}
== Technical Details ==
This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?
"Rather than use investor funds as promised, Crater misappropriated $6 million for his personal uses, such as buying artwork, antiques and jewelry, the indictment said."


== Total Amount Lost ==
== Total Amount Lost ==
Line 73: Line 52:
== Immediate Reactions ==
== Immediate Reactions ==
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?
"In 2018 it was discovered the company had been scamming people out of their hard-earned money. In exchange for their dollars, unlucky customers were getting nothing. A company that purported to be selling legitimate Bitcoin was selling air."
"My Big Coin managed to stay in business for a long time without being discovered because of pretending to be a legitimate business. It even claimed to be partnering with MasterCard. Over the cause of its operation, the company lured investors into funding around $6 million."


== Ultimate Outcome ==
== Ultimate Outcome ==
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?
"The scam wasn't uncovered until early 2018, and the minds behind My Big Coin are currently being sued."
 
"Mr. Crater was later arrested and charged with fraud and misappropriation. My Big Coin lawsuit became one of the first in American history that revealed a cryptocurrency could be considered a commodity with the jurisdiction held by the U.S. derivatives regulator."
 
"The founder of a Nevada-based company was arrested on Wednesday [February 27th, 2019] on federal charges he participated in a $6 million scheme to defraud people who wanted to buy a virtual currency called My Big Coin that he claimed was backed by gold."
 
"My Big Coin Pay is a major decision that clarifies the scope of the CFTC’s regulatory authority over cryptocurrencies that do not include a futures component. However, several questions remain. First, the court held that the CFTC had met its burden at the pleadings stage, leaving open the possibility that My Big Coin may be found to not be a commodity in later proceedings.93 Second, the court did not attempt to reconcile its opinion with CFTC v. Monex Credit Co.’s holding that the language of Section 6(c)(1) “prohibited fraudulent manipulation
but not fraud without manipulation.”94 It remains to be seen whether My Big Coin Pay will be an isolated case or whether the CFTC will continue to play a meaningful role in keeping the cryptocurrency sector accountable."


== Total Amount Recovered ==
== Total Amount Recovered ==
Line 102: Line 92:


== References ==
== References ==
<references><ref name="onyxgs-3142">[https://www.onyxgs.com/blog/six-cryptocurrency-fraud-schemes-you-should-know Six Cryptocurrency Fraud Schemes You Should Know | Onyx] (Sep 19, 2021)</ref>
<references>
 
<ref name="onyxgs-3142">[https://www.onyxgs.com/blog/six-cryptocurrency-fraud-schemes-you-should-know Six Cryptocurrency Fraud Schemes You Should Know - Onyx] (Accessed Sep 19, 2021)</ref>
<ref name="reuters-3749">[https://www.reuters.com/article/us-crypto-currency-mybigcoin-idUSKCN1QG2HY U.S. charges My Big Coin virtual currency firm founder with fraud | Reuters] (Oct 14, 2021)</ref>
<ref name="reuters-3749">[https://www.reuters.com/article/us-crypto-currency-mybigcoin-idUSKCN1QG2HY U.S. charges My Big Coin virtual currency firm founder with fraud - Reuters] (Accessed Oct 14, 2021)</ref>
 
<ref name="bu-3750">[https://www.bu.edu/rbfl/files/2021/02/6-Noah-Cherry.pdf CFTC v. My Big Coin Pay: The CFTC’s Jurisdiction over Cryptocurrency - Boston University] (Accessed Oct 14, 2021)</ref>
<ref name="bu-3750">[https://www.bu.edu/rbfl/files/2021/02/6-Noah-Cherry.pdf https://www.bu.edu/rbfl/files/2021/02/6-Noah-Cherry.pdf] (Oct 14, 2021)</ref>
<ref name="mybigcoinarchive-3751">[https://web.archive.org/web/20141020064626/https://www.mybigcoin.com/ My Big Coin - Any Time, Any Place, My Big Coin Archive October 20th, 2014 12:46:26 AM MDT] (Accessed Oct 14, 2021)</ref>
 
<ref name="youtube-3752">[https://www.youtube.com/watch?v=PSPdcdW7lOQ My Big Coin - mybigcoin.com - MBC - YouTube] (Accessed Oct 14, 2021)</ref>
<ref name="mybigcoinarchive-3751">[https://web.archive.org/web/20141020064626/https://www.mybigcoin.com/ My Big Coin - Any Time, Any Place, My Big Coin] (Oct 14, 2021)</ref>
<ref name="elliptic-2535">[https://www.elliptic.co/blog/bitcoin-fraud-cases-you-should-know-about 5 Bitcoin Fraud Cases You Should Know About - Elliptic] (Accessed Aug 15, 2021)</ref>
 
<ref name="vocal-5675">[https://vocal.media/theChain/cryptocurrencies-that-were-proven-to-be-scams Cryptocurrencies That Were Proven to Be Scams - Vocal Media] (Accessed Jan 16, 2022)</ref>
<ref name="youtube-3752">[https://www.youtube.com/watch?v=PSPdcdW7lOQ My Big Coin - mybigcoin.com - MBC - YouTube] (Oct 14, 2021)</ref>
<ref name="comparitech-10032">[https://www.comparitech.com/crypto/cryptocurrency-scams/ Worldwide crypto & NFT rug pulls and scams tracker - Comparitech] (Accessed Dec 15, 2022)</ref>
 
</references>
<ref name="elliptic-2535">[https://www.elliptic.co/blog/bitcoin-fraud-cases-you-should-know-about 5 Bitcoin Fraud Cases You Should Know About] (Aug 15, 2021)</ref>
 
<ref name="vocal-5675">[https://vocal.media/theChain/cryptocurrencies-that-were-proven-to-be-scams Cryptocurrencies That Were Proven to Be Scams | The Chain] (Jan 16, 2022)</ref></references>

Latest revision as of 12:38, 28 October 2024

Notice: This page is a new case study and some aspects have not been fully researched. Some sections may be incomplete or reflect inaccuracies present in initial sources. Please check the References at the bottom for further information and perform your own additional assessment. Please feel free to contribute by adding any missing information or sources you come across. If you are new here, please read General Tutorial on Wikis or Anatomy of a Case Study for help getting started.

Notice: This page contains sources which are not attributed to any text. The unattributed sources follow the initial description. Please assist by visiting each source, reviewing the content, and placing that reference next to any text it can be used to support. Feel free to add any information that you come across which isn't present already. Sources which don't contain any relevant information can be removed. Broken links can be replaced with versions from the Internet Archive. See General Tutorial on Wikis, Anatomy of a Case Study, and/or Citing Your Sources Guide for additional information. Thanks for your help!

My Big Coin Logo/Homepage

MyBigCoin operated a fraudulent company which made significant false claims, including a false partnership with Mastercard and being backed by gold. In the end, participants were receiving nothing, and $6m was lost without any opportunity of recovery.[1][2][3][4][5][6][7][8][9][10][11][12]

About My Big Coin

My Big Coin was based in the United States in Nevada[2]. It was founded by Randall Crater[2][13]. "Launched in 2013 by Randall Crater, My Big Coin started as a virtual currency wallet and platform that allowed merchants and consumers to process transactions with their own digital tokens."

The Reality

"In reality, Coins were not backed by gold or other valuable assets, did not have a partnership with MasterCard and were not readily transferable. Over the course of the scheme, Crater misappropriated over $6 million of investor funds for his own personal gain, including spending hundreds of thousands of dollars on antiques, artwork and jewelry."[13]

“CipherTrace’s investigation had revealed that MBC was not associated with a public blockchain and, therefore, lacked a crucial indicator of operating as a cryptocurrency until June 2017 -- long after Crater had marketed MBC as a virtual currency comparable to Bitcoin,” said the appellate filing[14].

What Happened

The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.

Key Event Timeline - My Big Coin Fraudulent Service
Date Event Description
September 3rd, 2015 3:45:21 AM MDT YouTube Video Published A YouTube video is shared which explains what My Big Coin is[5].
February 27th, 2019 5:01:59 PM MST Reuters Reports Fraud Charges Reuters reports that the My Big Coin founder Randal Crater has been charged with fraud, which happened on the same day[2].
July 21st, 2022 2:13:20 PM MDT US Department Of Justice Sentencing The US Department of Justice publishes a press release outlining their sentence for Randal Crater[13].
February 26th, 2024 1:44:55 PM MST Court Of Appeals Upholds Original Conviction A CoinTelegraph article reports that three judges have upheld the original conviction of Randal Crater. "Crater’s legal team argued that the court violated his Sixth Amendment rights by not enforcing subpoenas against witnesses he claimed would help his case, and including testimony from a crypto expert he argued was unqualified — Pamela Clegg, vice president of financial investigations at blockchain intelligence firm CipherTrace. According to the judges, no argument by Crater’s counsel “merits reversal.” "[14]

Technical Details

This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?

"Rather than use investor funds as promised, Crater misappropriated $6 million for his personal uses, such as buying artwork, antiques and jewelry, the indictment said."

Total Amount Lost

The total amount lost has been estimated at $6,000,000 USD.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

"In 2018 it was discovered the company had been scamming people out of their hard-earned money. In exchange for their dollars, unlucky customers were getting nothing. A company that purported to be selling legitimate Bitcoin was selling air."

"My Big Coin managed to stay in business for a long time without being discovered because of pretending to be a legitimate business. It even claimed to be partnering with MasterCard. Over the cause of its operation, the company lured investors into funding around $6 million."

Ultimate Outcome

"The scam wasn't uncovered until early 2018, and the minds behind My Big Coin are currently being sued."

"Mr. Crater was later arrested and charged with fraud and misappropriation. My Big Coin lawsuit became one of the first in American history that revealed a cryptocurrency could be considered a commodity with the jurisdiction held by the U.S. derivatives regulator."

"The founder of a Nevada-based company was arrested on Wednesday [February 27th, 2019] on federal charges he participated in a $6 million scheme to defraud people who wanted to buy a virtual currency called My Big Coin that he claimed was backed by gold."

"My Big Coin Pay is a major decision that clarifies the scope of the CFTC’s regulatory authority over cryptocurrencies that do not include a futures component. However, several questions remain. First, the court held that the CFTC had met its burden at the pleadings stage, leaving open the possibility that My Big Coin may be found to not be a commodity in later proceedings.93 Second, the court did not attempt to reconcile its opinion with CFTC v. Monex Credit Co.’s holding that the language of Section 6(c)(1) “prohibited fraudulent manipulation but not fraud without manipulation.”94 It remains to be seen whether My Big Coin Pay will be an isolated case or whether the CFTC will continue to play a meaningful role in keeping the cryptocurrency sector accountable."

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

General Prevention Policies

Providing a simple registration service ensures that operators are known. Regular validations can support any claims of asset backing such as gold, with cryptographic proof that all customers were fully included.

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.

References

  1. ↑ Six Cryptocurrency Fraud Schemes You Should Know - Onyx (Accessed Sep 19, 2021)
  2. ↑ 2.0 2.1 2.2 2.3 U.S. charges My Big Coin virtual currency firm founder with fraud - Reuters (Accessed Oct 14, 2021)
  3. ↑ CFTC v. My Big Coin Pay: The CFTC’s Jurisdiction over Cryptocurrency - Boston University (Accessed Oct 14, 2021)
  4. ↑ My Big Coin - Any Time, Any Place, My Big Coin Archive October 20th, 2014 12:46:26 AM MDT (Accessed Oct 14, 2021)
  5. ↑ 5.0 5.1 My Big Coin - mybigcoin.com - MBC - YouTube (Accessed Oct 14, 2021)
  6. ↑ 5 Bitcoin Fraud Cases You Should Know About - Elliptic (Accessed Aug 15, 2021)
  7. ↑ Cryptocurrencies That Were Proven to Be Scams - Vocal Media (Accessed Jan 16, 2022)
  8. ↑ Worldwide crypto & NFT rug pulls and scams tracker - Comparitech (Accessed Dec 15, 2022)
  9. ↑ https://caselaw.findlaw.com/court/us-1st-circuit/115857853.html (Accessed Oct 28, 2024)
  10. ↑ https://www.justice.gov/usao-ma/pr/founder-purported-cryptocurrency-company-sentenced-more-eight-years-prison-multi-million
  11. ↑ https://www.reuters.com/technology/my-big-coin-cryptocurrency-firm-founder-gets-8-years-prison-fraud-2023-01-31/
  12. ↑ https://www.reuters.com/legal/government/my-big-coin-virtual-currency-firm-founder-convicted-fraud-2022-07-21/
  13. ↑ 13.0 13.1 13.2 My Big Coin Founder Convicted of Cryptocurrency Fraud Scheme - Department Of Justice (Accessed Oct 28, 2024)
  14. ↑ 14.0 14.1 Appellate court rejects new trial for ‘My Big Coin’ founder - CoinTelegraph (Accessed Oct 28, 2024)
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