Patrick McDonnell, 46, of New York, admitted to fraudulently obtaining funds from clients using his investment firm, CabbageTech. According to the lawsuit, McDonnell lured investors to his firm by claiming to have traded $50 million worth of bitcoin for his many clients. However, these claims were false and McDonnell used investment funds for his personal expenses.
McDonnell allegedly referred to himself as the “coyote of Wall Street”, despite his falsified investment history. Last week, he pleaded guilty to wire fraud, stating, “I claimed to invest it in virtual currency and spent it on personal expenses.”. According to the report, it is estimated that McDonnell spent nearly $200,000 of the investment funds he acquired. The indictment further explained that McDonnell provided his clients with false balance statements, which showed that the funds were invested and growing.
McDonnell’s investment firm, CabbageTech, has been barred for its fraudulent activities and McDonnell will likely serve a sentence of up to two and a half years in prison.
Another case regarding a bitcoin investment scheme was investigated earlier this month, which involved over 1,000 investors and 22,858 laundered bitcoins.
Recent cryptocurrency cases like these represent the emerging schemes stemming from this new and often misunderstood industry. As fraudulent activity continues to increase in this space, it is clear that further regulation of the cryptocurrency industry and its platforms are required.
To learn more about cryptocurrency fraud and similar cases, visit the Newman & Shapiro Whistleblower Help Center and blog!