The founder of Miami-based CluCoin has been sentenced to two years and three months in prison after pleading guilty to wire fraud. Austin Michael Taylor, 41, the operator of the fraudulent scheme, will also pay restitution and forfeit assets to the tune of $1.14 million.
Taylor pled guilty to one count of wire fraud involving fraudulent transfers in August 2024. According to court documents, beginning in 2022, Taylor would regularly take funds earmarked for CluCoin-related activities to fund a spiraling online gambling addiction.
In something of an odd twist, Taylor appears to have taken tactics from the initial coin offering (ICO) bubble of 2017 to convince people to invest in the hot topics of the pandemic-era bull run. According to the U.S. Attorney's Office, Taylor used his “sizable social media following” to generate interest in his CluCoin ICO.
“Taylor created a ‘white paper’ for CluCoin, which was meant to educate and entice investors to participate in the ICO, which promised to have a charitable focus,” prosecutors wrote in a press release on Friday.
After the CLU token launched on BNB Chain in 2021, Taylor pivoted CluCoin’s focus to other projects, including the minting of “Goobers” non-fungible tokens (NFTs), a play-to-earn web3 game called Gridlock and the “Xenia” metaverse platform. He also organized and paid for an event called NFTCon: Into the Metaverse “to drive interest and investment in CLU, CluCoin and related projects.”
In early 2023, Taylor came forward and confessed to CLU investors that he had gambled investor funds away.
"Over the last year I got incredibly addicted to gambling," he wrote at the time. "Every dollar I could find I would put into Stake in hopes of winning big. Even when the big wins did happen it wasn’t enough. Eventually I lost everything.”
The FBI later alerted victims of the fraud “via NFT” that they were investigating Taylor, who also went by the alias DNPthree on Twitch, according to a website soliciting information about the case.
CluCoin peaked at a market capitalization of $17 million about a month after launching. It has a current market cap of $54,133. Goobers, launched in September 2021, had a peak floor price of 55.25 ETH before crashing.
Taylor asked the court to avoid a prison sentence, partly due to his veteran status. He originally faced a sentence of up to 20 years, the maximum prison sentence for a wire fraud charge.
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