A bitcoin entrepreneur who pitched an elaborate vision for a cryptocurrency Utopia in the Nevada high desert pleaded guilty to wire fraud in San Diego federal court this week, admitting he sold land he never owned to investors.
Morgan Rockcoons also pleaded guilty on Thursday to conducting an unlicensed money transmitter business, a charge that stems from a bitcoin-for-cash sale with an undercover U.S. Homeland Security Investigations agent.
It was Rockcoons’ bitcoin exchange services, openly advertised online, that first drew the attention of federal agents in 2015.
Under federal law, exchangers of bitcoin — a long string of code with monetary value — are treated the same as money transmitters and must be registered as such with the Financial Crimes Enforcement Network, the arm of the U.S. Treasury Department that works to combat money laundering with regulations. Exchangers must also know the identity of their customers and report any transactions over $10,000 to the government.
At the end of 2016, the undercover agent posed as a hash oil manufacturer who needed to buy equipment in bitcoin — a currency preferred by criminal organizations because it is hard to trace. Rockcoons admitted in his plea agreement that he transferred about $9,200 in bitcoin to the agent for $14,500 in cash, taking the remainder as a transaction fee.
He was arrested, and while he was out on bail last year, he launched a real estate venture called “Bitcointopia.” He advertised parcels of land in Elko County, Nev. — 500- to 1,000-acre plots for 0.5 bitcoin per acre — where he would build a city of the future around cryptocurrency, automation and technology. He was inspired by Walt Disney’s Tomorrowland.
It was an attractive idea for many bitcoin enthusiasts, and at least 10 investors bought land from him, according to his plea agreement.
In fact, Rockcoons owned less than 5 acres on two noncontiguous plots, prosecutors said. Much of the land in the area is actually owned by the federal government, one of his former business partners learned. The loss to investors was at least $45,600, the plea agreement states.
Rockcoons, who grew up in Chula Vista, faces up to 20 years in prison on the wire fraud charge, and up to five years on the money-transmitting charge.
The plea deal comes about a month before trial was to start.
Davis writes for the San Diego Union-Tribune.