Three Men Are Charged in $722M Crypto-Mining Ponzi Scheme

December 11, 2019, by Marko Vidrih on ALTCOIN MAGAZINE

US authorities have charged three men for their role in the “high-tech Ponzi scheme” with cryptocurrencies estimated at $722 million.

From 2014 to the current month, they managed the BitClub Network scheme, which attracted investors’ funds in exchange for shares of alleged mining pools and rewarded them for new members, the prosecution claims.

Matthew Brent Goettsche, 37, Jobadiah Sinclair Weeks, 38, and Joseph Frank Abel, 49, were arrested on Tuesday. They are accused of conspiracy, New Jersey County Attorney Craig Carpenito said. Two more defendants, whose names were not disclosed, are still at large.

Goettsche called potential investors of the BitClub Network “dumb” and “sheep”, and described his scheme as “a whole model built on idiots.” In September 2017, Goettsche sent an email to his accomplices stating that the BitClub Network would allow him to “retire very wealthy.”

Goettsche and Weeks are accused of conspiring to commit fraud using electronic means of communication, and all three are of conspiring to sell unregistered securities.

The BitClub Network claimed to attract investor money to buy mining equipment and computing power. In reality, the group falsified the financial statements and misled investors, the prosecution said.

Despite this, the company has long played an active role in the cryptocurrency space. In 2016, the BitClub pool reported that it was managed to get the transaction with a commission of $136,000, of which half it’s been donated to the Bitcoin Foundation. In addition, the company, apparently, supported the controversial proposal for scaling Bitcoin SegWit2x.

Author: Marko Vidrih