The founder of the crypto scheme CluCoin, who pleaded guilty to wire fraud last year for stealing $1.1 million in investor funds to gamble in online casinos, has asked a judge to spare him from prison.
Austin Michael Taylor asked a Miami federal court in a Feb. 11 sentencing memo to sentence him to probation, which would allow him to serve any sentence outside of prison. A memo from prosecutors filed the same day asked for him to be imprisoned for around two and a half years.
“Mr. Taylor understands that he had a lapse in judgment and has accepted responsibility for his actions,” his lawyer wrote. The memo added he completed an in-hospital mental health treatment program before his guilty plea and continues to receive treatment while attending Gamblers Anonymous meetings.
Excerpt of the opening to Taylor’s sentencing memo. Source: PACER
Taylor pleaded guilty to one count of wire fraud in August over his CluCoin scheme, which prosecutors said launched a token called CLU in May 2021. He later minted non-fungible tokens (NFTs) and said the scheme would develop a computer game and metaverse platform.
A year later, in May 2022, Taylor was able to withdraw the crypto from wallets that contained some CLU investor funds and, from then until December 2022, lost around $1.14 million worth of investor crypto through gambling at online casinos.
At the time of Taylor’s plea, the FBI said it would give notice to victims of planned restitution through their NFTs in one of the first times law enforcement used the medium to contact victims.
Taylor said in the memo that he had “maintained gainful employment” and was prepared to initially pay $25,000 toward paying back victims. He claimed he could “make additional large payments” if he received a probation sentence.
Taylor also asked the court to consider his 15 years of military-related service and said a probation officer noted “his military service may be relevant in determining whether a downward departure is warranted” under sentencing guidelines.
Meanwhile, prosecutors said in a Feb. 11 memo that Taylor should be sentenced to 27 months in prison followed by three years supervised release, which they said was a “reduction in a low-end sentence” when looking at advisory guidelines.
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They contended that a prison sentence was necessary to deter individuals from using cryptocurrency for fraudulent activities.
The government argued that the court should deliver a “strong message” that manipulating cryptocurrency to deceive investors would lead to a substantial prison term.
“Fraudulent cryptocurrency investments are rampant and growing throughout the United States,” prosecutors said. “Through the sentence it imposes, this Court can and should send a clear message that the fraudulent exploitation of investors will not be tolerated.”
Taylor’s sentencing hearing is slated for Feb. 14.
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