The US Department of Justice has announced the sentencing of Michael Joseph McElhiney, a Spokane resident, to over three years in federal prison for operating a fraudulent crypto investment scheme. The fraud, which spanned over a year, defrauded multiple investors of more than $350,000.

The sentencing, handed down by United States District Judge Thomas O. Rice, includes 41 months in federal prison, three years of supervised release, and restitution totaling $326,119. McElhiney was immediately remanded to federal custody following the hearing.

The fraudulent scheme revolved around a fake crypto investment fund, MAC Blockchain Solutions. McElhiney lured investors by presenting himself as an “experienced operator” of a successful crypto investment fund, promising lucrative returns from investments in emerging cryptocurrencies, Ethereum staking, and liquidity pools.

However, according to the US DoJ report, the promised crypto investments were never made, and the funds were instead used for McElhiney’s expenses, including gambling.

The agency further revealed that McElhiney targeted victims through personal encounters and online interactions, including meeting individuals via Uber rides, dating apps, and video games such as Call of Duty” under the username “Bing Bong.”

His strategy often involved developing personal relationships to gain trust before soliciting investments. Victims were provided with “fabricated data” through a platform called Coin.FYI, which falsely displayed progress and growth in their supposed investments.

Furthermore, investors were promised that they could liquidate their investments anytime and receive guaranteed returns. In reality, the funds were “misappropriated” for McElhiney’s personal use.

The scheme extended beyond cash, with rare art and precious metals among the assets defrauded. When victims attempted to withdraw their investments, McElhiney resorted to deceit, citing fabricated excuses such as security breaches, theft, and withdrawal delays.

Despite victims’ demands for their funds, McElhiney continued to perpetuate the scheme by presenting false scenarios, further exploiting the trust of his investors.

US Attorney Vanessa Waldref expressed her devastation for the victims who suffered financial and emotional losses due to McElhiney’s actions. Wadref noted:

I’m devastated for the victims who suffered financial and emotional consequences of Mr. McElhiney’s scheme, and am grateful for the skilled investigators with Homeland Security Investigations and the Spokane Police Department and dedicated prosecutors in my office that uncovered this scheme and worked diligently to hold Mr. McElhiney accountable for his actions.

Meanwhile, Matthew Murphy, acting Special Agent in Charge for Homeland Security Investigations in Seattle, highlighted the sentencing as a warning against fraudulent schemes.

He noted McElhiney’s exploitation of digital currency to deceive investors and reaffirmed the dedication of law enforcement to pursue such cases, irrespective of the platforms or technology involved.

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