Crypto Coin Scam Had East Hampton Address

A former East Hampton man has been accused by the United States Commodity Futures Commission of defrauding investors by selling shares in a phony virtual-money company. 

The commission filed a federal lawsuit in U.S. District Court for the District of Massachusetts against Randall Crater, who, along with his wife, Erica Crater, was evicted from a Diane Drive residence in November, according to East Hampton Town Justice Court records. The businesses’ address was listed as 81 Newtown Lane in East Hampton, the location of a U.P.S. Store where Mr. Crater kept a mailbox. 

The suit charges that Mr. Crater, along with a co-defendant, Mark Gillespie of Hartland, Mich., conned investors by selling shares in a company set up in Las Vegas called My Big Coin Pay. The suit points out that the name of the virtual currency sounds very much like the virtual currency BitCoin, and that investors were defrauded of $6 million by the two accused men. Neither has a license from the futures commission to sell virtual currency, which is regulated by the commission. Of the $6 million the suit says the two took from investors, $5 million of it was from residents of Massachusetts, where the suit was launched in federal court. Mr. Crater is named in the suit as the founder of My Big Coin Pay, while Mr. Gillespie is listed as having solicited sales for the company.

The “defendants also solicited potential M.B.C. customers to invest in M.B.C.P. by purchasing both stock in a company which had merged with M.B.C.P. and alleged licenses related to the medical-marijuana business and marijuana derivative products such as Trokie, a marijuana-based lozenge.” 

On the company’s website, the suit says, the two men promised “that merchants and consumers could process transactions with our new digital currency.” The website gave phony valuations for My Big Coin Pay, the suits says, with the defendants changing the values on a regular basis to make it look like an actual commodity. “The defendants arbitrarily changed the price or value of M.B.C. to make it appear as though it fluctuated in an effort to replicate price changes that might be observed in any other actively traded commodity,” the suit charges. “The increasing prices for M.B.C. on the website and the M.B.C. exchange were illusory and false.” 

The defendants are also alleged to have used various internet tools to deceive their investors. “For example,” the suit says, “the defendants posted a YouTube video in which defendants claimed that M.B.C. was a fully functioning virtual currency that could be used to buy goods and services, and that was actively trading on ‘several currency exchanges’ for dollars, Euros, and more, and stated that M.B.C. was the only virtual currency backed by gold to give prospective customers the illusion that M.B.C. was safe to purchase.” None of this, the suit says, was true.

The YouTube video directed viewers to mybigcoin.com, which was still operational as of yesterday morning, despite the fact that the judge in the case, Rya Zobel of the U.S. District Court for the District of Massachusetts, issued a restraining order and froze the defendants’ assets on Jan. 16. 

On the home page for mybigcoin.com, viewers are told that “My Big Coin is a cryptocurrency” with which anyone can “buy, sell, stake, receive, trade, shop and donate all around the world and receive 1 percent interest per year!” 

In addition to the false claim that the virtual currency was the only one backed by gold, the suit says, the accused men also made “the representation that M.B.C. had partnered with MasterCard with the promise that M.B.C. could be used anywhere MasterCard was accepted. These representations were false.”

Still listed on the website, as of yesterday, was another grand promise: that My Big Coin would be installing automatic teller machines “in a store near you.”

Another online resource used by the two defendants, the suit alleges, was a press release through a public relations company called Cision. The press release is riddled with grammatical errors and misspellings: It begins, “My Big Coin Inc.’s Co-Founder Randall Crater Announces the Crypto-Currency Exchange Company’s Agreement to have its own Branded Master-Card [sic] attached to its e-wallet.” The release goes on to say that My Big Coin had reached an agreement with a Canadian company, TruCash. That claim was false, as well, according to the suit.

Yet another online resource used, the suit says, was a financial internet chatroom called Raging Bull. “This will go through the roof,” one comment read. “I encourage all to give it a look!”

As noted above, the suit lists Mr. Crater as a co-founder of My Big Coin. His co-founder, according to another lawsuit against Mr. Crater, is Timothy Harrington of Rockaway, N.J., who launched his suit against his former partner in June in the Eastern District of New York Court in Central Islip. Mr. Harrington, in his suit, calls himself an “equal partner” with Mr. Crater and states that while he believed that mybigcoin.com and another company, bluemagicgaming.com, had generated $10 million in profits, he had never seen a penny of that revenue, nor had he ever seen an accounting of the company’s finances. Mr. Harrington’s complaint states that in December of 2013, he paid $50,000 into the Greyshore Website Management Company, based in East Hampton, making him an equal partner.

Mr. Harrington’s suit maintains that Mr. Crater ran the business and kept the books out of an office at 81 Newtown Lane, the U.P.S. Store where Mr. Crater kept a mailbox.

The suit by the U.S. Commodity Futures Commission describes where at least some of the profits went. The suit names three people as relief defendants: Mr. Crater’s sister, Kimberly Renee Benge of State Road, N.C; his mother, Barbara Crater Meeks, of Elkin, N.C., and Erica Crater, his wife. According to the complaint, Erica Crater, between January 2014 and June of last year, bought a house in Florida for $645,000 and spent $339,689 at a jewelry store in Southampton, as well as spending some $517,719 at a Southampton auction house specializing in fine art and antiques. There also was an expenditure by one of the relief defendants of $209,000 at an “East Coast-based marina.”

A hearing was scheduled for Tuesday, when the temporary restraining order against My Big Coin and its operators was due to run out. The futures commission is scheduled to argue that a preliminary injunction against the defendants be issued by the court. However, Ray E.  Chandler, attorney for the defendants, informed the court that he was ill with the flu, and that a substitute attorney was not ready to take the case. The commission objected to this request. The judge agreed to adjourn the case while continuing the temporary restraining order against the defendants, and set a new date for March 15.