DoJ arrests Ponzi operators planning to retire ‘RAF’ through cryptocurrency scam

Global firms working on brand cryptocurrencies take a cue from Facebook’s Libra case
Lines are blurring between fintech banking and consumer digital wallets, major consumer brands have much to gain and more to lose as the race to serve future customers with their own unique currencies accelerates.

The US Department of Justice (DoJ) has arrested three men in connection to a cryptocurrency Ponzi scheme that has allegedly defrauded investors out of $722 million.

The emergence of cryptocurrency including Bitcoin (BTC) and Ethereum (ETH), in just a few short years, has exploded into an active ecosystem involving alt-coins, Initial Coin Offerings (ICOs) in which tokens are offered in exchange for money to push crypto projects off the ground, and everyone and their dog exploring the underlying blockchain as a potential business transformation tool.

Enthusiasm surrounding the blockchain, which in itself is a valuable technology that does have business value, has been matched with consumers and investors seeking to cash in on virtual coins — but not every scheme is legitimate.

On Tuesday, three men were charged in connection to BitClub Network, a cryptocurrency mining scheme that operated through April 2014 to December 2018.

See also: Bitcoin battered: The worst crypto catastrophes of 2019

The BitClub Network promised investors shares in mining pools, used to generate cryptocurrency, in return for funds made through wire, cash, checks, and cryptocurrency transfers. In addition, rewards were offered for the recruitment of new members, of which a membership fee of $99 was imposed.

However, DoJ prosecutors say the men arrested — Matthew Brent Goettsche, 37, Jobadiah Sinclair Weeks, 38, and Joseph Frank Abel, 49 — provided “false and misleading figures” that participants were told were “Bitcoin mining earnings” — despite…

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