Morgan Rockcoons, (aka Morgan Rockwell) pleaded guilty to 2 counts of cryptocurrency related crimes in San Diego’s federal court last week. The creator of a supposed Bitcoin (BTC) utopia known as “Bitcointopia” was charged with conducting an unlicensed money transmitter business and defrauding investors who bought land parcels in Bitcointopia which Rockcoons did not actually possess.
According to local state daily the Los Angeles Times (Mar 8), Rockcoons had advertised Bitcoin to fiat exchange services openly online back in 2015 although he did not possess a money transmission license.
This attracted the attention of the authorities which busted him in a 2016 operation when an undercover agent posed as a hash oil manufacturer looking to buy Bitcoin to purchase equipment. Rockcoons admitted to transferring about $9,200 in Bitcoin to the agent for $14,500 paid in cash, the difference of which he took as a commission.
US federal law currently considers crypto exchange services to be the same as money transmitters. They must be registered as such with the Financial Crimes Enforcement Network, which tackles money laundering under the US Treasury Department.
Various states have been divided, however, on how crypto exchanges should be treated as with regards to money transmission. The Crypto Sight reported recently that Utah is attempting to exempt blockchain companies from the Money Transmitter Act. Pennsylvania has already granted an exemption, while North Carolina has made it clear it will require such businesses to comply with the Act.
Rockcoon’s second charge occurred while he was out on bail for the first. He had launched a project with the vision to create a Bitcoin-based utopia based on Walt Disney’s Tomorrowland. Called “Bitcointopia”, it was meant to be “the desert crypto-kingdom of the future” built out in the Nevada desert.
He allegedly sold acre slices of Nevada for 0.5 BTC (about $1,977 at press time), two acres for one BTC (about $3,956), and three acres for 1.5 BTC (about $5,934). However, Rockcoons himself only owned less than 5 acres of land across two non-contiguous plots but had advertised that he had 500 to 1,000 acres of land at his disposal. Most of the land he claimed to own actually belongs to the state.
For defrauding investors of over $45,600 in the scam, Rockcoons could face up to 20 years in prison, and up to five years for the separate charge of unlicensed money transmission.