CabbageTech’s Patrick McDonnell $11 Million Cryptocurrency Scam Details
The $11 million scam: How Patrick McDonnell's one-man crypto scam will cost him dearly
Patrick McDonnell, the one-man band behind CabbageTech, must have believed himself to be the cryptocurrency world's Frank Abagnale after setting up the company which scammed a large number of investors out of their Bitcoin in exchange trading advice.
While McDonnell must have felt successful initially, a court ruling will see any feeling of accomplishment wiped away from him, as he's now landed a hefty sum which he is now legally obligated to repay to the victims of his CabbageTech scam.
The fine of over $11 million was initiated by the CFTC, which caught onto the scam an initiated a suit against McDonnell. The regulator went on to sue McDonnell after it had shut down its various websites and social media channels after receiving roughly 62 separate cryptocurrency transactions.
The terms placed against McDonnell in the suit included providing restitution to those investors defrauded by himself but also included monetary penalties.
While the CFTC wished to impose a financial penalty of just over $1 million on McDonnell, this isn't the maximum penalty which could be foisted upon him. According to the Organization's own Inflation-adjusted penalty tables under section 6c of the of the Commodity Exchange Act, this could result in the additional fine of $177,501 per illegal transaction.
Adding up all 62 transactions, this would equate to a total financial penalty of $11,005,062.
“This action is among the latest examples of the CFTC’s continuing commitment to act aggressively and assertively to root out fraud and bad actors involved in virtual currencies.” James McDonald, the Director of Enforcement at the CFTC stated.
“As alleged, the defendants here preyed on customers interested in Bitcoin and Litecoin, promising them the opportunity to get the inside scoop on the next new thing and to benefit from the trading acumen of a supposed expert.”
While it remains uncertain whether the CFTC will pursue this level of financial penalties against McDonnell and CabbageTech, the emphasis of the penalty rests on the restitution of money stolen from investors.
While the scale of fraud instigated by McDonnell and CabbageTech remain uncertain, the fact that such high fines are being proposed against the parties, it can be assumed that the scale of theft may be as high as the tens of millions.
The firm response by the CFTC has been diametrically opposed to that taken against a similar scam which took place in Vietnam. A scam which saw investors collectively lost over 658 million, with the Vietnamese government doing little to compensate those that lost money.