Founder of CluCoin Admits to $1.1 Million Crypto Fraud, FBI Utilizes NFTs for Victim Assistance
TLDR:
CluCoin founder Austin Michael Taylor pleaded guilty to wire fraud. Taylor stole $1.14 million from investors for online gambling. The FBI will use NFTs to notify victims of the fraud scheme. Taylor faces up to 20 years in prison. Sentencing is scheduled for October 31, 2024.
Austin Michael Taylor, the 40-year-old founder of the cryptocurrency project CluCoin, has pleaded guilty to wire fraud after admitting to stealing over $1.1 million from investors.
Taylor, who launched CluCoin in 2021, initially marketed the project as a way to fund charities, leveraging his large following as a Twitch streamer under the username DNP3.
According to court documents filed in Florida, Taylor regularly transferred funds intended for CluCoin-related projects to his personal crypto wallets.
He then used these funds to gamble at online crypto casinos, including Stake.com. The fraudulent activities took place primarily in 2022, while Taylor was managing CluCoin and making promises to investors about various developments, including a metaverse-based video game called “Xenia.”
CluCoin’s initial coin offering (ICO) took place in May 2021, but the project’s trading volume and value quickly declined.
As the project struggled, Taylor shifted its focus away from charity and towards other ventures, including NFTs and metaverse platforms. In April 2022, he organized a conference called “NFTCon: Into the metaverse” at a Miami hotel to generate further interest in CluCoin and its spin-off projects.
Between May and December 2022, Taylor misappropriated a total of $1.14 million worth of investor funds. In January 2023, he publicly admitted to using investor funds for online gambling and voluntarily ceded control of the project to his business associates.
Taylor’s lawyers stated that he had “secretly succumbed to a gambling addiction” during this period.
As part of his plea agreement, Taylor has agreed to forfeit $1.14 million for victim restitution. The Federal Bureau of Investigation (FBI) has announced an innovative approach to notify victims of the fraud scheme.
In what appears to be a first for law enforcement, the FBI plans to use non-fungible tokens (NFTs) to contact “identified victims” about the planned restitution.
The use of NFTs for legal notifications is not entirely unprecedented. In a previous case, crypto lawyers served hackers who had stolen $970,000 from a self-hosted wallet using NFTs to convey official court documents.
This new application by the FBI represents a significant step in adapting legal practices to emerging technologies in the crypto space.
Taylor’s sentencing is scheduled for October 31, 2024, before U.S. District Court Judge Jacqueline Becerra of the Southern District of Florida. He faces a maximum sentence of 20 years in prison for the wire fraud charge.
The CluCoin case has left many investors feeling betrayed and financially impacted. One investor, who lost over $2,000, described the ordeal as “humiliating” and mentioned the loss of trust from family members who were also convinced to invest.
Another investor expressed low expectations of recovering their $1,000 investment but remained hopeful that the FBI’s involvement might lead to some form of restitution.
The U.S. Attorney’s Office has requested that anyone who believes they may be a victim in this fraud scheme provide relevant information to the FBI at their website here.
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