The U.S. Commodity Futures Trading Commission (CFTC) on Wednesday announced the filing of a federal court enforcement action charging commodity fraud and misappropriation related to the ongoing solicitation of customers for a virtual currency known as My Big Coin (MBC).

The CFTC alleges the defendants, Randall Crater, Mark Gillespie and Las Vegas-based My Big Coin Pay, Inc., misappropriated more than US$6 million from its customers, and used those funds for personal expenses, in what was essentially a Ponzi scheme.

Specifically, between January 2014 and 2018, the defendants fraudulently solicited customers “by making false and misleading claims” and omissions about the virtual currency’s value, usage, and trading status, including that it was backed by gold, the CFTC alleges. “In reality, as alleged, the supposed trading results were illusory, and any payouts to customers were derived from funds fraudulently obtained from other customers in the manner of a Ponzi scheme,” the CFTC says in a news release.

The allegations have not been proven. A U.S. district court judge has issued a restraining order freezing the assets of the defendants, and several relief defendants, who, the CFTC alleges, received customer funds from the company without providing any legitimate services to clients.

“As this case shows, the CFTC is actively policing the virtual currency markets and will vigorously enforce the anti-fraud provisions of the Commodity Exchange Act. In addition to harming customers, fraud in connection with virtual currencies inhibits potentially market-enhancing developments in this area. We caution potential virtual currency customers, once again, that they should engage in appropriate diligence before purchasing virtual currencies,” says James McDonald, CFTC director of enforcement, in a statement.

The CFTC is seeking monetary penalties, restitution, disgorgement of ill-gotten gains, and trading and registration bans, among other sanctions.