A scammer who fleeced crowdfunding platform Indiegogo users out of $800,000 reportedly used the money to buy Bitcoin Core (BTC), according to details released as part of a Federal Trade Commission (FTC) investigation into the alleged fraud.
In its complaint, the FTC said serial scammer Douglas Monahan had used money from his iBackPack campaign, after promising users a high-tech backpack. After the first campaign raised $720,000, Monahan then ran several other campaigns on the platform to net a total of $800,000.
Rather than use the money to fund the development of the product, Monahan is instead alleged to have spent the funds on “personal purposes,” namely buying BTC. According to the government agency:
“Defendants have used a large share of contributions for Defendant Monahan’ s own personal purposes, such as making bitcoin purchases and ATM withdrawals and paying off personal credit cards; for marketing efforts to raise additional funds from consumers; and for other business ventures.”
Monahan is also alleged to have sold crowdfunder personal data after backers began receiving an influx of unsolicited marketing communications.
The action against Monahan is only the second time the FTC has ever pursued a failed Indiegogo campaign, after the $120,000 raised by Erik Chevalier for a board game that was never delivered back in 2015.
At the time of press, the Indiegogo page remains live, despite being inundated with comments from angry investors. One user said they were glad the Federal Trade Commission was pursuing the BTC scammer:
“I love that the FTC is suing you, and I hope they make Indiegogo just as guilty for letting this continue without protecting their customers.”
Some commenters have also drawn parallels with ICOs, where investors are being let down by failed projects in a significant number of cases, with the majority of ICOs expected to fail. Andrew Smith, director of the Bureau of Consumer Protection at FTC, said intentionally deceiving crowdfunders would not be tolerated.
“If you raise money by crowdfunding, you don’t have to guarantee that your idea will work. But you do have to use the money to work on your idea—or expect to hear from the FTC,” Smith said.
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