Four men have been arrested and charged with promoting a cryptocurrency mining pyramid scheme that defrauded victims out of $722 million USD.
Matthew Brent Goettsche, Jobadiah Sinclair Weeks and Joseph Frank Abel were arrested in various locations in the United States early this month and were charged December 5th with conspiracy to offer and sell unregistered securities.
Silviu Catalin Balaci was arrested in Germany on December 10th. Balaci is now detained pending extradition proceedings in Germany.
“Defendants Goettsche, Balaci, Weeks, and Abel…conspired to sell BitClub Network shares—which were securities—notwithstanding that BitClub Network did not register the shares with the U.S. Securities and Exchange Commission. Weeks and Abel created videos and traveled around the United States and the world to promote BitClub Network and recruit others to invest.”
BitClub Network was a “mining pool” service promoted as a scheme to allow small-scale investors a way to participate in cryptocurrency mining without having to purchase their own equipment.
According to the press release from the U.S. Attorney’s Office, New Jersey:
“From April 2014 through December 2019, the defendants operated BitClub Network, a fraudulent scheme that solicited money from investors in exchange for shares of purported cryptocurrency mining pools and rewarded investors for recruiting new investors. Goettsche, Weeks, and others conspired to solicit investments in BitClub Network by providing false and misleading figures that BitClub investors were told were ‘bitcoin mining earnings,’ purportedly generated by BitClub Network’s bitcoin mining pool.”
Prosecutors allege that Goettsche and co-conspirators knew they were duping investors and had little regard for victims:
“Goettsche discussed with his conspirators that their target audience would be ‘dumb’ investors, referred to them as ‘sheep,’ and said he was…