A press release from the Department of Justice in New Jersey has confirmed the arrest of three directors of the BitClub Network on charges of conspiracy to commit wire fraud. BitClub Network allegedly stole about $722 million from investors who thought there were putting money into a Bitcoin mining pool.
The defendants including Matthew Brent Goettsche, 37, of Lafayette, Colorado; Jobadiah Sinclair Weeks, 38, of Arvada, Colorado; and Joseph Frank Abel, 49, of Camarillo, California, have been charged with conspiracy to commit wire fraud and conspiracy to offer unregistered securities.
According to the prosecutors, the defendants advertised a Bitcoin mining pool and asked investors to fund the effort, claiming that the proceeds from mining would be shared with the investors. What they were doing, however, was to use funds from newer investors to pay those who had pumped in money earlier. The scam had been running since 2014.
The press release also says that Goettsche mocked investors in emails with his fellow conspirators:
“Goettsche discussed with his conspirators that their target audience would be ‘dumb’ investors, referred to them as ‘sheep’, and said he was ‘building this whole model on the backs of idiots.’”
In addition to the above, Goettsche in an email had asked his conspirators to crash the percentage of profits being promised to investors so he could “retire RAF!!! (rich as f**k).”
The defendants could be paying fines of up to $500,000 including a possibility of spending 25 years behind bars.
Recently, a similar scam was busted by Brazilian police after defrauding thousands of investors of more than $300 million.
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