Recently, U.S. federal courts have issued orders requiring two individuals to pay a combined total of over $9 million in restitution for fraudulent digital asset schemes. The Commodity Futures Trading Commission (CFTC) also launched a public awareness campaign to warn against relationship investment scams targeting online users.
Court Orders in Fraud Cases
In separate rulings, the U.S. District Court for the Eastern District of New York and the U.S. District Court for the District of Massachusetts sanctioned two individuals for defrauding investors in digital asset trading schemes.
New York Case: Rashawn Russell Ordered to Pay Over $1.5 Million
Rashawn Russell, a New York resident, was found guilty of fraudulent solicitation and misappropriation of investor funds. The court ordered him to pay over $1.5 million in restitution and imposed an eight-year ban on personal trading.
Russell is permanently barred from registering with the CFTC and soliciting or trading in CFTC-regulated markets on behalf of others.
According to court documents, between November 2020 and August 2022, Russell solicited more than two dozen retail customers to invest in a purported digital asset trading fund. However, instead of using the funds for trading, Russell misappropriated them for personal expenses, gambling activities, and Ponzi-like payments to earlier investors.
Russell previously pleaded guilty in September 2023 to wire fraud and access device fraud, receiving a sentence of over three years in prison, along with a three-year supervised release term.
Florida Case: Randall Crater Ordered to Pay Over $7.6 Million
Randall Crater of Heathrow, Florida, was ordered to pay $7.6 million in restitution for defrauding at least 28 customers through a fraudulent virtual currency scheme known as My Big Coin.
The court found that from 2014 to 2018, Crater misled investors by falsely claiming that My Big Coin was a fully functioning digital currency backed by gold.
Crater used the misappropriated funds to purchase luxury items, including antiques, fine art, and jewelry. He was previously convicted in a criminal trial and sentenced to over eight years in prison, along with a restitution and forfeiture order of $7.6 million.
While the court orders restitution, the CFTC cautioned that victims may not recover their losses, as the wrongdoers may lack sufficient assets.
CFTC Launches ‘Dating or Defrauding?’ Awareness Campaign
Amid rising cases of digital asset fraud, the CFTC’s Office of Customer Education and Outreach launched a national campaign to educate the public on relationship investment scams.
These scams, also known as ‘pig butchering,’ involve fraudsters using dating apps, social media platforms, and messaging apps to establish trust before persuading victims to invest in fake cryptocurrency trading schemes.
Key warning signs include:
- Online contacts requesting cryptocurrency, gift cards, or wire transfers.
- Refusal or inability to meet in person.
- Moving conversations off social media platforms to encrypted messaging apps.
- Encouraging investments with promises of high returns.
Melanie Devoe, Director of the CFTC’s Office of Customer Education and Outreach, emphasized the importance of public vigilance. “Criminals are using sophisticated tactics to target individuals on social media and dating platforms. Raising awareness can help prevent these scams,” Devoe said.
The campaign will involve federal, state, and nonprofit organizations, with participating agencies including the FBI, Federal Trade Commission (FTC), and Financial Crimes Enforcement Network (FinCEN). Users can follow the #DatingOrDefrauding hashtag for more information and resources.
Reporting and Prevention
The CFTC urged individuals to report suspicious investment offers to its fraud center at CFTC.gov/complaint or the FBI’s Internet Crime Complaint Center at IC3.gov. Victims can also seek support through financial fraud recovery services.
As digital asset fraud continues to evolve, regulatory agencies remain committed to prosecuting offenders and protecting investors. Public awareness and education remain critical in preventing future scams.
