The fraudster behind My Big Coin has been sentenced to more than eight years in prison.

Randall Crater, the founder of My Big Coin Pay Inc. was convicted in connection with a scheme to defraud investors by marketing and selling fraudulent virtual currency in July 2022. He had been found guilty of defrauding investors and customers out of millions of dollars, committing wire fraud and making unlawful monetary transactions.

As the first sentencing of a cryptocurrency company founder, federal prosecutors had requested a 13-year prison sentence to send a message to other fraudsters in the space. US District Judge Denise Casper in Boston decided that this was too far, but also rejected Crater’s request for a 30-month prison sentence.

In total, Crater was sentenced to 100 months in prison and has been ordered to forfeit nearly $7.7 million.

The East Hampton, New York, resident scammed investors between 2014 and 2017 by using misrepresentations about the nature and the value of the purported My Big Coin cryptocurrency. Chief among his lies was the claim that My Big Coin was a fully functioning cryptocurrency backed by $300 million in gold, oil and other assets. Crater also falsely told investors that My Big Coin had a partnership in place with MasterCard and that the company’s coins could readily be exchanged for government-backed paper currency or other virtual currencies.

Prosecutors said that Crater used the fraudulently obtained money to make lavish purchases on items such as cars, jewellery, artwork and antique coins.

Despite the mountains of evidence to the contrary, Crater said in court that he “did not set out to steal money from anyone” but apologised and described himself as “remorseful.”

Of the precedent-setting case, Judge Casper said: "Certainly cryptocurrency is a newer enterprise, a newer market, a 21st Century market. But the scheme at its core was age-old, and that was fraud."

The first case against My Big Coin was brought up in 2018 by the Commodity Futures Trading Commission (CFTC). This led to one of the first court rulings that a virtual currency could be considered a commodity within the CFTC’s jurisdiction.

Scams are becoming increasingly visible within cryptocurrencies and other blockchain-related projects. The practice of ‘rug pulls’ – where a small number of people create and artificially inflate the value of a coin before selling their assets at the expense of later investors – in particular is rampant, though the nascent state of crypto regulation means it is technically not illegal.

Famous YouTuber and professional wrestler Logan Paul was recently the subject of a multi-part expose which accused his CryptoZoo cryptocurrency game as being one such example of a rug pull. Despite recordings of Paul claiming that the project had been abandoned, since the report was published the internet celebrity has restated his commitment to CryptoZoo which remains in an unfinished state.

But while this fraud is largely taking place in the US, the UK is beginning to take steps by launching regulation plans for crypto. Though not explicitly targeting fraud, a set of consultation proposals announced by HM Treasury include rules for the lending of crypto asses and the strengthening of trading platforms.

The government said it wants to regulate cryptocurrency in the same way it regulates traditional finance, with a goal of mitigating the risks and volatility that can occur in the cryptocurrency market.

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