A Massachusetts federal court has ordered My Big Coin Pay, Inc. and My Big Coin, Inc., along with individuals Mark Gillespie of Michigan and John Roche of California, to collectively pay nearly $25.8 million in penalties and restitution to the Commodity Futures Trading Commission (CFTC).

The ruling was issued on Wednesday by the US District Court for the District of Massachusetts and stems from a long-running digital asset fraud scheme involving the fraudulent sale of a virtual currency known as My Big Coin (MBC).

The court’s decision includes a $19.3 million civil monetary penalty and an additional $6.4 million in restitution for customers who were deceived by misleading claims about the coin’s value and backing.

According to the CFTC’s official press release, from January 2014 to June 2017, the defendants falsely promoted MBC as a fully functional digital currency backed by gold and actively traded on established platforms. In reality, the currency lacked any such support or market presence.

Over $6 million was collected from at least 28 customers under pretenses, while the funds were largely misappropriated by co-defendant Randall Crater, who was previously convicted and sentenced to more than eight years in prison for his central role in the scheme.

The court’s latest order resolves the commodities regulator’s civil enforcement claims against Gillespie, Roche, and the two Nevada-based My Big Coin companies. It also imposes a permanent trading ban on the defendants, barring them from participating in any CFTC-regulated markets or registering with the agency.

Crater, the primary orchestrator of the fraud, was earlier sentenced in a separate criminal case and ordered to forfeit and repay more than $7.6 million

In a statement, the agency said.

“The CFTC cautions that orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.”

The US Securities and Exchange Commission (SEC) has filed charges against New York-based crypto exchange Unicoin, along with several top executives, alleging a scheme to defraud investors through misleading claims tied to the sale of rights certificates and company stock.

The SEC has accused Unicoin of falsely claiming to have raised over $3 billion through its rights certificate offerings. In reality, the agency claimed the company raised no more than $110 million from investors.

Deceptive Crypto Investment Campaign

According to a complaint filed in the Southern District of New York, the SEC accused CEO and Chairman Alex Konanykhin, former president and board chairwoman Silvina Moschini, former Chief Investment Officer Alex Dominguez, and general counsel Richard Devlin of orchestrating or facilitating deceptive promotional campaigns that resulted in over 5,000 individuals purchasing rights certificates marketed as access to “asset-backed” Unicoin tokens.

Promotional materials, widely circulated through high-profile advertising in airports, taxis, television, and social media, portrayed these rights certificates as secure and lucrative investments linked to crypto assets allegedly backed by billions of dollars in real estate and equity holdings in private companies.

However, the SEC argued that Unicoin’s actual holdings represented only a small fraction of those claims.

In an official statement, Mark Cave, Associate Director in the SEC’s Division of Enforcement, said,

“We allege that Unicoin and its executives exploited thousands of investors with fictitious promises that its tokens, when issued, would be backed by real-world assets including an international portfolio of valuable real estate holdings.”

False Claims of Regulatory Compliance

Unicoin and its executives also reportedly misled investors by claiming the offerings were registered with the SEC or were otherwise compliant with US regulations, which they were not.

The securities agency further alleges that Konanykhin personally sold nearly 38 million rights certificates, including to investors that Unicoin had initially excluded to maintain a registration exemption, which violated securities laws governing unregistered offerings. All four individuals are charged with antifraud violations, with Unicoin and Konanykhin also facing charges related to unregistered securities sales.

As such, the SEC is seeking permanent injunctions, civil penalties, and disgorgement of ill-gotten gains, as well as prohibiting the three executives from serving as officers or directors of public companies. Additionally, Devlin, the company’s general counsel, has agreed to settle the charges without admitting or denying the allegations. His settlement includes a permanent injunction and a $37,500 civil penalty for negligently making misleading statements in private placement documents.

Konanykhin wrote in an April 3 Miami Herald opinion piece that the SEC informed Unicoin in December of planned fraud charges. However, he “vehemently refuted” the claims.