A lawsuit originating in Massachusetts stemming from an alleged scheme in which a company fraudulently obtained more than $6 million from customers has Surry County connections.
The issue surrounds a firm called My Big Coin Pay Inc. linked to State Road in western Surry. Residents of that area who are allegedly involved, including a woman in Elkin, have had their assets frozen as the case works its way through the legal system.
My Big Coin was incorporated in 2014 as part of the growing cryptocurrency industry. This refers to a type of digital currency used as a medium of exchange for transactions instead of cash or electronic transfers that take more time to complete among other drawbacks.
Cryptocurrency involves decentralized controls, as opposed to traditional centralized banking and electronic money systems. The first decentralized cryptocurrency, and the most well-known, was Bitcoin, formed in 2009.
In addition to moving faster, benefits of that tool of commerce include reduced fraud and identity theft and more open access than the traditional systems.
However, the luster of cryptocurrency became tarnished for 28 people through their association with My Big Coin, whose principals allegedly obtained in excess of $6 million from them including through fraudulent means compared to a Ponzi scheme, according to court documents.
A complaint seeking monetary relief on their behalf and civil penalties recently was filed in U.S. District Court in Massachusetts by the Commodity Futures Trading Commission. It is an independent agency of the U.S. government which regulates certain markets, including virtual currency commodities, and monitors fraudulent conduct.
The commission alleges, in a 23-page complaint, wrongdoing on the part of top officials of My Big Coin: Randall Crater, who formerly lived in State Road and now is a resident of New York, and Mark Gillespie of Michigan.
Crater and Gillespie are listed as main defendants in the action who allegedly were involved directly in fraudulent solicitations through the virtual currency scheme which victimized customers.
Listed as “relief” defendants are Crater’s sister, Kimberly Renee Benge, doing business as Greyshore Advertisement of 1643 Old Highway 21 at State Road, who now lives in Ronda; and his mother, Barbara Crater Meeks of Elkin.
Relief defendants are persons named in civil litigation who are not accused of wrongdoing, but who are alleged to have received money or property originally obtained illegally, to which they have no legitimate claim.
Through all this, My Big Coin remains in business.
The Commodity Futures Trading Commission alleges that from at least January 2014 to June 2017 and possibly later, Crater and Gillespie solicited customers throughout the U.S. by making false and misleading claims and omissions about My Big Coin.
This included its value, usage and trade status, and statements that My Big Coin was backed by gold — providing what the commission alleges was the “illusion” that its currency was safe to buy.
Customers paying in to the company were led to believe My Big Coin was a fully functioning virtual currency that could be used to buy goods or services, and was being traded actively on several currency exchanges, court documents further state.
This included reporting the daily trading price when no such price existed.
“Any payouts of funds to customers were derived from funds fraudulently obtained from other MBC (My Big Coin) customers in the manner of a Ponzi scheme,” court documents state. A Ponzi scheme is a type of fraud in which belief in the success of a phantom enterprise is perpetuated by the payment of quick returns to initial investors from money invested by later ones.
As My Big Coin customers began to raise questions about their accounts, Randall Crater and Gillespie allegedly tried to conceal their fraud by issuing additional coins to them and falsely claiming they had secured a deal with another exchange to trade MBC currency.
The defendants further are accused of misappropriating virtually all of the approximately $6 million paid by customers. The money was used to buy a home, fine art, jewelry, luxury goods, interior decorating and other home improvement services, and for travel and entertainment.
“As a result, MBC customers have lost most, if not all, their funds,” court documents state.
The main defendants are said to have funneled customer funds or arranged for customers to send money to the accounts of Kimberly Renee Benge and Barbara Crater Meeks of the local area, and Crater’s wife in New York.
Once received, the money was transferred to other accounts of defendants or withdrawn to make purchases for the main and relief defendants’ own benefit, the commission alleges.
Court documents say that as an example, Kimberly Renee Benge allegedly withdrew money from one account and bought a $1.8 million cashier’s check that was deposited into an account of her Greyshore business.
None of the funds obtained from My Big Coin customers were used to buy virtual currency for them, the commission charges.
It is asking the court to order the defendants to turn over any ill-gotten gains and be assessed civil penalties for their actions and other appropriate relief.
In conjunction with the court filing, a temporary restraining order was granted to prevent those associated with the My Big Coin scheme from dissipating, transferring or concealing any assets that might be subject to such payments.
It was not known this week when the case will be heard in court, where the Commodity Futures Trading Commission is seeking a jury trial.
No telephone listings could be found for Kimberly Renee Benge or Barbara Crater Meeks in order to seek their comments on the case.
Tom Joyce may be reached at 336-415-4693 or on Twitter @Me_Reporter.