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.