All things crypto or virtual are in vogue these days. The mention of “blockchain” by a company executive might cause the share price to move. The suggestion that crypto currency is involved can create huge interest. The intense interest in all things crypto may be one of the reasons that pricing for the various coins is so volatile. It is also a reason that investors may be easily defrauded by the unscrupulous. That is precisely what happened in U.S. v. McDonnel, No. 19-cr-148 (E.D.N.Y. Guilty plea June 21, 2019) where the Defendant to the Court he used “old fashion deception” to swindle investors.
Patrick McDonnel operated a firm called CabbageTech which was also known as Coin Drop Markets. Beginning as early as November 2014 Mr. McDonnel marketed the firm and himself as an experience virtual currency trader. He offered to provide investors with trading advise on virtual currencies. Mr. McDonnel was also available to trade for investors. Those who signed up for his services received account statements showing their investments and balances.
The advice, statements and account balances were all fraudulent. Mr. McDonald was not a virtual currency expert, just an old-fashioned huckster. Mr. McDonald’s expertise was an illusion. What was not an illusion was the investor funds he took – at least $194,000 in U.S. currency, 4.41 Bitcoin, 206 Litecoin, 620 Ethereum Classic and 1,342,624 Verg from at least 10 investors. Mr. McDonald pleaded guilty to one count of wire fraud. The date for sentencing has not been announced.