Operation of unregistered Bitcoin exchange results in prison sentence for Morgan Rockcoons

Maria Nikolova

Morgan Rockcoons has been sentenced to 21 months in prison for wire fraud and operating an unlicensed money transmitting business.

The efforts of the US authorities to extinguish cryptocurrency fraud continue. On Tuesday, May 28, 2019, Morgan Rockcoons of Las Vegas, Nevada, was sentenced by U.S. District Judge Anthony J. Battaglia to 21 months in prison for wire fraud and operating an unlicensed money transmitting business. Rockcoons was also ordered to forfeit $80,600 in illicit profits.

Rockcoons pleaded guilty on March 7, 2019, admitting that he operated a Bitcoin exchange without registering with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury. He also admitted to setting up a scheme to defraud individuals in connection with the purported sale of real estate in Elko County, Nevada, that he did not own.

According to the government’s sentencing memorandum, Rockcoons advertised his Bitcoin exchange services on the website LocalBitcoins.com. In April 2016, the defendant’s LocalBitcoins.com profile showed that he continued to advertise as a trader and seller of Bitcoin in San Diego, with his profile reflecting that he had engaged in more than 500 transactions. As of October 2017, the defendant’s profile indicated that he conducted more than 1,000 bitcoin trades with more than 644 people. Rockcoons received a commission of as much as 36% per transaction.

Prior to his 2018 arrest, Rockcoons was indicted on November 8, 2017 for operating the unlicensed money transmitting business. He was arrested on that charge on February 9, 2018, and he was released on bond pending trial. In spring 2018, while on pretrial release, Rockcoons began promoting Bitcointopia on the internet and via social media. A purported real estate development in the desert in Elko County, Nevada, Rockcoons touted Bitcointopia as a place where bitcoin is “legal tender.”

Rockcoons offered parcels of land for sale for Bitcoin, claiming: “The land is currently owned by Bitcointopia, Inc. corporation.” Rockcoons further stated, “500-1,000 Acre plots are for sale for 0.5 BTC per acre.” Victims who sent Rockcoons Bitcoin never received their title to land as promised. To date, agents have identified at least 10 victims of Rockcoons’ fraud.

The two cases were combined in a superseding indictment.

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