The founder of a cryptocurrency token business in Miami has been sentenced to 27 months in prison for committing wire fraud during the last crypto boom and ordered to pay victims $1.14 million.

Austin Michael Taylor, 41, founded CluCoin, a cryptocurrency project, which held a successful Initial Coin Offering in May 2021. An ICO, like an IPO for traditional businesses, is where capital is obtained from investors and others through trading their more established cryptocurrency for a new digital token.

But CluCoin proceeded to crash, losing value. The firm subsequently pivoted to other business ventures, which failed. Finally, Taylor developed a gambling addiction, and he lost his investors’ money at online casinos.

The sentence, handed down by U.S. District Judge Jacqueline Becerra in Miami on Feb. 14, is specific to one count of wire fraud and was in line with the punishment requested by the U.S. Attorney’s Office for the Southern District of Florida. It comes after Taylor pleaded guilty in August 2024 in Miami federal court. After jail time, Taylor will have to spend three years of supervised release.

More than jail

Judge Becerra imposed additional conditions. Taylor cannot “apply for, solicit or incur any further debt, included but not limited to loans, lines of credit or credit card charges, either as a principal or cosigner” without first getting approval from the U.S. Probation Officer. He must also enter a treatment program for his gambling addiction and pay for it.

Victims of CluCoin’s shenanigans were not named in publicly available court documents. But the U.S. Attorney’s Office wrote in its sentencing request that there were “hundreds of investors.” It already contacted them, it said. Still, it asked for any individuals who invested in CLU, believe you are a victim and/or received an NFT to contact the FBI and visit this site.

CluCoin’s early days

During the early days of the pandemic, Taylor, a computer programmer from Maryland, developed a large internet following by giving away money and prizes. Beginning in May 2021, he “leveraged this following to begin soliciting investments in his new cryptocurrency,” a court filing in August 2024 describing his guilty plea said.

The cryptocurrency was initially called CluShare but then changed its name to CluCoin. He had a popular X account, where he went by @DNPThree. It remains up with over half a million followers on Sunday, Feb. 16.

In 2021, Taylor announced he’d hold an Initial Coin Offering for CluCoin. “During this ICO, anyone could become a CluCoin coin holder by sending more established cryptocurrency to a cryptocurrency address associated with the Defendant,” a court document said.

He also published a white paper — in the business world a mini-research paper — which would serve as his investment prospectus, a guide to what investors should expect from the company. In it, he said one of the company’s main goals was to “provide ongoing income for charitable projects deemed appropriate for support by our com3munity” of CluCoin coin holders.

He also assured potential investors “that while a portion of the funds would flow to a developer cryptocurrency address that defendant controlled, he’d use funds consistent with white paper.”

CluCoin held a successful ICO on May 19, 2021, “during which investors sent millions of dollars worth of more established cryptocurrency to a cryptocurrency address affiliated with CluCoin project.” That was in exchange for “newly issued CluCoin digital tokens.”

CluCoin’s price rose and in early June 2021, Taylor incorporated CLU LLC in Aventura.

South Florida was hot

This happened during a time when Miami not only experienced a tech boom but became an epicenter for crypto companies and entrepreneurs, who moved to the region from all over the country and world. Local officials got into the act, too. The Miami Heat’s bayfront arena was renamed FTX Arena in a $135 million deal inked in 2021 with Miami-Dade County. FTX was then a high-flying crypto trading exchange.

Miami City Mayor Francis Suarez also became a big champion of crypto.

The bust

Yet crypto’s winter came fast.

In 2022, FTX failed and then filed bankruptcy. Last year, its former CEO Sam Bankman-Fried was convicted of seven counts of wire fraud and sentenced to 25 years in prison.

In April 2023, MiamiCoin, one of the ventures Suarez promoted, had its trading suspended after encountering liquidity issues. Neither the city nor Suarez created MiamiCoin, but they did push it.

Meanwhile, more than a year earlier, CluCoin’s value and trading volume already “declined precipitously.”

At that time, Taylor told people h would shift away from funding charities and “would instead focus on multiple potentially profitable online business ventures.”

That included creating NFTs, or non-fungible tokens, going into the Metaverse and launching a computer game called Xenia. Crypto was still going strong in Miami.

In April 2022, he organized a conference at a Miami hotel called “NFTCon: Into the Metaverse.” He considered it a way to try to regain trust, meeting people face-to-face.

Yet, there was something attendees weren’t told.

“While defendant was managing Clu and making representations to potential and existing investors about its Activities, he was secretly succumbing to a gambling addiction,” the plea agreement said.

“Government cryptocurrency tracing showed that almost immediately, and continuing through December 2022, defendant routinely transferred funds that he had told investors he would use for CLU ventures out of this address to his personal cryptocurrency exchange account,” the court document said. “And then from that account to multiple online casinos, where the Defendant lost the funds gambling.” About $1.14 million was transferred between May and December 2022.

In January 2023, he publicly admitted this to his investors and followers. He ceded control of his company to his business associates.

U.S. Attorney Manolo Reboso prosecuted this case. Assistant U.S. Attorney Emily Stone is in charge of asset forfeiture. Taylor’s plea agreement in August was signed off on by the then top U.S. Attorney for the region, Markenzy Lapointe, who stepped down in January before President Donald Trump took office.

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