By Nate Raymond
BOSTON (Reuters) - The founder of a defunct cryptocurrency business was sentenced on Tuesday to more than eight years in prison for defrauding investors and clients out of millions of dollars by marketing a virtual currency called My Big Coin using lies and half-truths.
Federal prosecutors had urged US District Judge Denise Casper in Boston to sentence Randall Crater to 13 years in prison for sending a message to others in the first sentencing of a cryptocurrency company founder for marketing fraud.
While Casper concluded that request went too far, he rejected Crater's claim that a 30-month prison term was enough to punish him for his false claims, including that My Big Coin was an actual gold-backed cryptocurrency.
โCertainly cryptocurrency is a newer company, a newer market, a 21st century market,โ Casper said. "But the scheme at its core was old, and that was a fraud."
Crater, who was sentenced to 100 months in total and ordered to forfeit nearly $7.7 million, is expected to appeal. In court, he apologized but said he never intended to defraud anyone.
โI didn't set out to steal money from anyone,โ he said. "That doesn't mean I'm not sorry."
In July, a jury found Crater, 52, guilty of committing wire fraud and making illegal money transactions in a trial that spilled over from a precedent-setting case by the US Commodity Futures Trading Commission. .us
The 2018 CFTC lawsuit against Crater and his failed company, Nevada-based My Big Coin Inc, led to one of the first court rulings holding that a virtual currency could be considered a commodity within the regulator's jurisdiction.
Prosecutors later secured Crater's indictment in 2019, charging him with causing investors and clients to lose $7.5 million between 2014 and 2017 with lies about My Big Coin, whose name sounded similar to popular virtual currency bitcoin.
Prosecutors said those false claims included that My Big Coin was an actual virtual currency, was backed by gold, and had a partnership with MasterCard. Prosecutors said he used the money to buy cars, jewelry, art and ancient coins.
(Reporting by Nate Raymond in Boston; Editing by Bill Berkrot)
