Three men have been charged by U.S authorities for having taken part in a $722 million cryptocurrency Ponzi scheme. The three Matthew Brent Goettsche 37, Joseph Frank Abel 49, and Jobadiah Sinclair Weeks 38, have all been charged with conspiracy after being arrested on Tuesday.
The three operated Bitclub network, a ponzi scheme that has been running since 2014 until this month. The Ponzi scheme solicited money from investors in exchange for shares in a purported crypto mining pool. Investors were also to be rewarded for recruiting new investors into the scheme according to prosecutors. The three did not act alone according to U.S attorney general Craig Carpenito in New Jersey. According to his office two more defendants whose names have not been disclosed remain at large.
Investigations have revealed a statement made by one of the defendants in custody, Matthew Brent Goettsche. Goettsche had said that the BitClub Network investors were “dumb” and “sheep”, adding that he was building his whole business model on the backs of idiots. Also present in the statement that further incriminated him, Goettsche sent an email to a conspirator saying that the BitClub network would help them “retire RAF!!! (Rich as f*ck).
Goettsche and Weeks were charged with conspiracy to commit wire fraud, while all three men face charges of conspiracy to sell unregistered securities. According to U.S attorney general, Craig Carpenito, the lawyers of the three defendants couldn’t be found immediately but are expected to appear at the hearing on Tuesday. The Bitclub operation that was operated by the three was quite attractive to unsuspecting investors. The operation claimed that it wanted to pool investor money in order to buy mining hardware and computer capacity then distribute profits. The group instead reported fake profits and defrauded investors according to prosecutors.
Bitclub is not the only crypto related firm to have caught the eye of the authorities recently. Bitcoin rival Onecoin was also in the headlines when a lawyer was convicted for laundering $400 million from the alleged Onecoin Ponzi scheme. Such cases breed fear among investors who are looking to pump money into crypto startups and further add to the credibility of crypto cynics.