On January 24, 2018, the CFTC announced the filing of an enforcement action charging Nevada-based firm My Big Coin Pay, Inc. and its founders with operating a scheme through which they fraudulently offered the sale of a virtual currency, known as "My Big Coin." This enforcement action follows two CFTC enforcement actions against other fraudulent virtual currency schemes within the preceding week.
The My Big Coin Pay, Inc. complaint alleges that from January, 2014 to January, 2018, the defendants fraudulently solicited more than $6 million from customers throughout the United States by making false and misleading claims that My Big Coin was actively being traded, was backed by gold and could be used anywhere MasterCard credit cards were accepted. The defendants also allegedly misrepresented My Big Coin's daily trading price in reports on its website, when no daily trading price existed because My Big Coin was not actively being traded. Additionally, the complaint alleges that any payouts customers did receive were a result of a Ponzi scheme in which My Big Coin Pay, Inc. used funds from other customers to pay off previous investors.
The complaint alleges that the defendants used the funds to purchase a home, antiques, fine art, jewelry, luxury goods, furniture, interior decorating, travel and entertainment. In its suit, the CFTC is seeking civil monetary penalties, restitution of customer funds, rescission of transactions entered into with My Big Coin Pay, Inc., disgorgement of ill-gotten gains, trading and registration bans for the defendants and permanent injunctions against further violations of the federal commodities laws.
The CFTC's press release is available at: http://www.cftc.gov/PressRoom/PressReleases/pr7678-18?_sm_au_=iVVB45PsTTVjRndM.
The CFTC's complaint is available at: http://www.cftc.gov/idc/groups/public/@lrenforcementactions/documents/legalpleading/enfmybigcoinpaycomplt011618.pdf.
Shearman & Sterling's latest cryptocurrency update is available at: https://www.shearman.com/perspectives/2018/01/cryptocurrencies-us-regulatory-attention.
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