This is not the first time the word “pyramid” has been mentioned in the context of cryptocurrencies this year. The day before, it described the operating model of Celsius, an online trading platform that went bankrupt in 2022.

It turns out that before the collapse, the company had such notable financial problems that it used money from new users to pay existing ones, among other things. Naturally, such activity violates the terms of service for customers, who would certainly not have appreciated the decision.

The logo of the Celsius trading platform

What to get arrested for in cryptocurrencies

According to a recent press release from the US Department of Justice, Crater was sentenced by US District Court Judge Denise Kasper in Massachusetts. In doing so, Crater was convicted by a federal jury on four counts of fraud, three counts of illegal money transactions and one count of operating an unlicensed money transfer business.

My Big Coin has managed to attract enough users over the course of its existence. In addition to its successful 'partnerships', it has also been positioned as a cryptocurrency exchange where digital assets can be exchanged for US dollars.

Randall Crater

In total, Crater and his associates managed to steal around $7.6 million. A substantial portion of this amount was spent on real estate and expensive cars. Another million was spent on antiques, jewellery and art.

U.S. Attorney Rachel Rollins said in a statement that the damage done by Crater caused a serious blow and financial hardship to his victims. Here is the relevant rejoinder cited by Cointelegraph.

For nearly four years, Mr Crater maintained a brazen fraudulent scheme, preying on investors and customers who believed him and his fake business, resulting in more than $7.5 million in losses to victims.

Cryptocurrency fraudsters

Even after his conviction, Crater continued to defend his innocence, claiming in a YouTube video that the My Big Coin credit card actually existed. In addition, one of the investors in the project allegedly testified under oath that he had used the card on several occasions. Here is the video in question.

After his time behind bars, Kreiter will be under supervision for the next three years.

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Sam Bankman-Fried, founder of the FTX exchange, could be next to go to jail over user cryptocurrency fraud. And now the terms of his limited stay at large have become tougher. Specifically, yesterday Judge Lewis Kaplan for the Southern District of New York issued a formal ban on any contact between him and current or former employees of FTX and Alameda Research.

The possibility of such an injunction had previously been considered in the FTX bankruptcy court in the context of encrypted messengers. Any contact Sam would now be “only in the presence of counsel”.

What’s going on with FTX

A new ban has been placed on the conditions of Sam’s bail. He had previously been released from the courtroom under house arrest in December and is now at his parents’ home in Palo Alto.

Here is Kaplan’s quote from his ruling.

The undisputed information available to the court regarding “the nature and seriousness of the danger posed by the defendant’s continued release on existing conditions” has changed significantly since his release. There appears to be a substantial risk of inappropriate contact with the alleged witnesses.

In other words, the court fears that Bankman-Fried may influence witnesses in the case through personal conversations. According to Kaplan, it was Sam who was behind the decision to delete the Slack and Signal correspondence between FTX and Alameda employees from 2021. He then told former Alameda CEO Caroline Allison that without proper documentation any potential legal case against the companies would be harder to pursue.

Recall that Sam had previously actually reached out to former colleagues, offering to "mend fences". In addition, he had written a letter to the new FTX chief executive, John Ray, and even offered to meet him in person. Apparently, such activity seems suspicious to the court.

Judge Lewis Kaplan

Another petition was filed with the US Bankruptcy Court for the District of Delaware the day before, seeking valuable information from Gabriel Bankman-Fried and Barbara Fried, brother and mother of FTX’s founder. According to the creditors of the exchange, the family members may have important information about the location of assets that could be used to compensate the victims.

According to Cointelegraph, Sam is also being asked to be more “forthcoming”. Here is the relevant line.

Despite all statements, Mr Samuel Bunkman-Fried has not responded to the requests and has not fulfilled them voluntarily. As a result, a court-sanctioned summons is required.

Ex-CEO of FTX Sam Bankman-Fried

Former FTX Group chief technology officer Gary Wang and former Alameda Research executive Caroline Allison have also refused to provide further information as part of these requests, although they are cooperating with the investigation. Meanwhile, Sam’s mother Barbara Freed has “ignored” requests altogether.


We believe the prospect of trouble for Sam Bancman-Fried is more than real. Although the former businessman himself refuses to admit his guilt, some of his colleagues are already cooperating with the investigation. Accordingly, the prosecution may have more than enough arguments by the time the hearings start in October 2023. And it is not certain that Sam will be able to challenge them.