Virtual currency scammer gets 33-month prison sentence

Maria Nikolova

Patrick McDonnell, head of Coin Drop Markets, was sentenced to 33 months of imprisonment for wire fraud.

Patrick McDonnell who last year pleaded guilty to wire fraud in connection with a scheme to defraud investors in virtual currency, got a 33-month prison sentence on Thursday.

The Federal court in Brooklyn issued the sentence. In addition, McDonnell was ordered to pay $224,352 in restitution.

According to the indictment against McDonnell, from November 2014 to January 2018, he portrayed himself on social media as an experienced trader in virtual currency, promising investors he would provide trading advice and purchase and trade virtual currency on their behalf. Beginning in approximately May 2016, McDonnell made similar representations and promises to investors through his Staten Island-based company, CabbageTech, Corp., also known as Coin Drop Markets.

But neither McDonnell nor CabbageTech provided investment services. In reaility, McDonnell sent investors false financial statements showing that their investments had been profitable, and stole their money for his personal use.

In total, McDonnell defrauded at least 10 victims of at least $194,000 in US currency, 4.41 Bitcoin, 206 Litecoin, 620 Ethereum Classic and 1,342,634 Verge currency, for a total loss of $224,350. In addition to lying to investors about his company’s prowess, McDonnell also solicited customers using a false alias, “Jason Flack,” an individual who did not actually exist.

“Mr. McDonnell used his knowledge of virtual currencies to scam investors. While he thought he could outsmart law enforcement, his arrest and today’s sentence shows, no matter where you are, what’s done in the dark will be brought to the light,” stated USPIS Inspector-in-Charge Philip R. Bartlett.

Read this next

Digital Assets

BlackRock digs further into crypto with metaverse ETF

BlackRock, the world’s largest asset manager with almost $10 trillion in AUM, is set to launch a new metaverse ETF to help investors securely monetize on the booming immersive version of the internet.

Digital Assets

Binance wins license in New Zealand as rival Huobi shutters derivatives

Binance, the world’s largest crypto exchange by traded volume, has obtained licenses to operate in New Zealand, even after rival Huobi shutdown derivatives trading last month due to concerns about regulations.

Retail FX

Hong Kong busts perpetrators of ‘ramp and dump’ scam

Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), has charged thirteen suspects of market manipulation in a joint operation with the local police.

Institutional FX

TradingView integrates market data from German Tradegate exchange

TradingView announced that it ‎has increased data coverage to allow its users to receive information from ‎and get free access to the intra-day and tick data from Tradegate Exchange.

Retail FX

Spotware Systems introduces Custom Push Notifications for cTrader mobile apps

Spotware Systems, a technology provider for the electronic trading industry, is introducing a new push notification feature to alert mobile users of price swings and market fluctuations through their cTrader app.

Market News

The Week Ahead: 30 September from David Madden, Market Analyst at Equiti Group

Sterling dominated the headlines last week, as there were concerns the UK government might struggle to service its debt.

Inside View

How does the quality of signal providers affect your business?

A must-have onboarding process for brokers with investment services like PAMM, MAM, or copy trading


DBS deploys Nasdaq Trade Surveillance

“The confidence that markets and our clients have in DBS as a safe and trusted banking group is anchored on our ability to detect and respond to anomalous activity, which in turn calls for a robust surveillance and prevention infrastructure.”

Industry News

SEC charges Justin Costello and David Ferraro for securities fraud and posing as billionaire veteran

The Securities and Exchange Commission charged Cannabis executive Justin Costello and David Ferraro, an associate of Costello’s, for promoting the stock of several microcap companies on social media without disclosing their own simultaneous stock sales as market prices rose.