23-Year-Old Who Lied to Bank About Bitcoin Holdings Pleads Guilty to Fraud
A Pennsylvania man who told a West Virginia bank he had $640,000 in bitcoin in an effort to secure a loan pleaded guilty to bank fraud on Tuesday.
Randall Joseph Smail, 23, admitted in the U.S. District Court for the Northern District of West Virginia that he used a phony account statement from the Kraken cryptocurrency exchange to defraud the Pendleton Community Bank of a $552,533 loan, according to plea documents.
Smail told the bank he could only withdraw his $640,000 bitcoin in $200,000 increments “due to tax issues,” according to Jan. 27 court filings. Both statements were false, as Smail did not have any bitcoin with Kraken.
Smail ultimately received $1,800 of the bank loan. He could face a maximum of 30 years in prison and a $1,000,000 fine for committing bank fraud.
There were discrepancies in the amount of bitcoin the government said Smail lied about having. The Department of Justice’s Tuesday press release and the case’s first court filings gave a value of $640,000,000. However, Smail’s lawyer, Stanton Levenson, said the real figure was $640,000. The U.S Attorney’s Office did not respond to a CoinDesk request for comment.
“Very few in the traditional banking system comprehend cryptocurrency,” a Kraken spokesperson told CoinDesk. “As an industry, this is the reason we go to great lengths to educate clients and traditional banking partners about crypto.”
UPDATE (July 9, 15:17 UTC): This article has been updated to include comment from Kraken.
