SPOKANE, Wash. — United States District Judge Thomas O. Rice announced on Wednesday that 38-year-old Michael Joseph McElhiney was sentenced to more than three years in federal prison in connection to a cryptocurrency scheme where he defrauded investors of more than $350,000.
Judge Rice also imposed three years of supervised release, $326,119.95 to be paid in restitution and ordered McElhiney to be immediately remanded to the custody of the United States Marshals Service following the hearing.
According to court documents and information presented at sentencing, McElhiney defrauded investors by pretending to operate a cryptocurrency investment fund known as MAC Blockchain Solutions.
Between March 4, 2021, and September 10, 2022, McElhiney promised prospective investors that he and his purported business partners ran a successful cryptocurrency investment fund that invested in emerging cryptocurrencies and other blockchain-based projects, such as Ethereum staking and cryptocurrency liquidity pools.
Court documents say McElhiney typically contacted his victims in person and often solicited individuals working as Uber drivers as well as women whom he met through dating apps.
McElhiney also met victims online while playing the video game “Call of Duty” under the username “Bing Bong.” McElhiney often met with victims several times and developed personal relationships with them before successfully soliciting and receiving funds.
McElhiney promised to invest his victims’ money and manage their investments for his victims’ benefit. For example, McElhiney promised certain returns on victims’ investments and always assured investors they could liquidate their investments and get their money back at any time.
Court documents say McElhiney then sent investors information using a platform called Coin.FYI that purported to track the progress of their investments. However, he never invested the funds provided by investors and instead kept the funds for his personal use.
McElhiney defrauded investors of more than $350,000 in this manner, including defrauding investors not only of cash but also of rare art and precious metals.
“Investors, trusting 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," stated U.S. Attorney Waldref. “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.”
McElhiney continued to falsely and fraudulently tell victims that their assets had been invested in a cryptocurrency fund when victims sought to remove their assets from the “fund" and falsely represented that he could not timely return victims’ assets, giving the following reasons: MAC Solutions had experienced security breaches, McElhiney was out of the country and unable to facilitate withdrawals, McElhiney and MAC Blockchain Solutions had been the victims of theft, payment processing platforms had paused withdrawals and there were other delays in processing withdrawals.
"Today’s sentencing serves as a clear reminder that those who prey on the trust of others through fraudulent schemes will be held accountable,” said Matthew Murphy, acting Special Agent in Charge, HSI Seattle. “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.”
This case was investigated by Homeland Security Investigations and the Spokane Police Department. It was prosecuted by Assistant United States Attorney Dan Fruchter.
