In Spokane, United States District Judge Thomas O. Rice handed down a significant sentence to Michael Joseph McElhiney, a 38-year-old former resident of Spokane, Washington. McElhiney was sentenced to 41 months in federal prison for his involvement in a cryptocurrency scheme that defrauded investors of hundreds of thousands of dollars. Alongside the prison term, Judge Rice imposed 3 years of supervised release, ordered a restitution of $326,119.95, and immediately remanded McElhiney to the custody of the United States Marshals Service.

Details of the Cryptocurrency Fraud Scheme

According to court documents and information presented during the sentencing, McElhiney defrauded investors by posing as the operator of a cryptocurrency investment fund called MAC Blockchain Solutions. This scheme ran from March 4, 2021, to September 10, 2022. He promised prospective investors that he and his purported business partners managed a successful cryptocurrency investment fund that invested in emerging cryptocurrencies and blockchain-based projects like Ethereum staking and cryptocurrency liquidity pools.McElhiney often contacted his victims in person. He targeted Uber drivers he met during rides and women he connected with through dating apps. He also met victims online while playing the video game “Call of Duty” under the username “Bing Bong.” He built personal relationships with victims before soliciting and receiving their funds.He promised to invest victims' money and manage their investments for their benefit, assuring them of certain returns and that they could liquidate their investments at any time. He used a platform called Coin.FYI to show investors false information about the progress of their investments. In reality, he kept the funds for his personal use, including gambling at casinos. The Coin.FYI accounts he showed were fabricated figures to deceive investors.McElhiney defrauded investors of more than $350,000, including rare art and precious metals. Even when victims wanted to remove their assets, he continued to falsely represent that their assets were invested in a cryptocurrency fund. He gave various reasons for not being able to return the assets promptly, such as security breaches, being out of the country, being victims of theft, and payment processing delays.

The Impact on Investors

Investors had placed their trust in Mr. McElhiney with their money, art, and precious metals, expecting a safe return on their investment. However, instead of getting their funds back, they suffered financial and emotional consequences. U.S. Attorney Waldref stated, “Investors trusted Mr. McElhiney with their money, art, and precious metals expected a safe return on their investment. Instead, Mr. McElhiney stole their money and used it for his own purposes. When investors asked for their money back, Mr. McElhiney lied to perpetuate the fraud.”

The Role of Law Enforcement

This case was investigated by Homeland Security Investigations and the Spokane Police Department. Assistant United States Attorney Dan Fruchter prosecuted the case. Acting Special Agent in Charge Matthew Murphy of HSI Seattle said, “Today’s sentencing serves as a clear reminder that those who prey on the trust of others through fraudulent schemes will be held accountable. This individual exploited the allure of digital currency to deceive and steal from countless investors. We remain committed to investigating and prosecuting those who attempt to manipulate others for personal gain, regardless of the platform or technology they use. We appreciate the tireless work of our law enforcement partners and the U.S. Attorney’s Office to bring individuals like McElhiney to justice.”