CabbageTech Operator Arrested by FBI on Crypto Fraud Case

The US Attorney for the Eastern District of New York has announced that Patrick McDonnell, aka Jason Flack, who purportedly operated a Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term trading firm was arrested by the FBI on Tuesday over more than $1 million crypto-related fraud.

The court order finds that Staten Island-based CabbageTech, doing business as Coin Drop Markets (CDM), and its principal Patrick McDonnell ran a fraudulent scheme that involved buying and trading the Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term Bitcoin and Litecoin. According to the US Attorney, McDonnell was indicted on nine counts of securities and wire fraud. He faces up to 20 years in federal prison if convicted.

The CFTC alleges that beginning in November 2014 and continuing through January 2018, the defendants conspired to defraud investors by enticing them to send their money to CabbageTech, in exchange for trading recommendations and digital coin purchases under McDonnell’s direction.

Nearly all of the pool money was lost, according to the complaint. The defendants are accused of fraud, misappropriation, registration violations and issuing false statements. In total, McDonnell defrauded ten victims of $194,000, 4.41 Bitcoin, 206 Litecoin, 620 Ethereum Classic, and 1,342,634 Verge coins.

A Ponzi-‎like Fashion

In connection with the promotion of their pool, McDonnell made a series of materially false claims to lure investors interested in ‎digital coins trading. The claim was made that pool participants could get extraordinary investment returns – up to 300 percent in less than a week.

“However, neither McDonnell nor CabbageTech provided investment services. Instead, McDonnell sent investors false balance statements purportedly showing that their investments had been profitable, and stole their money for his personal use. When investors requested refunds, McDonnell initially offered excuses for delays in repayment, and eventually stopped responding at all,” stated USPIS special agent-in-charge Bartlett.

Court documents also reveal that he used new investors’ funds to pay back other investors in a Ponzi-‎like fashion, so that they would invest or refer additional money, thereby ‎allowing the scheme to continue for a longer period of time. ‎

Instead ‎of using the investors’ monies in trading, the fraudsters ‎misappropriated all of the funds, then removed the website and social media materials and ceased communicating with customers.