Three Men Arrested in $722 Million Cryptocurrency Fraud Case
Recently, three men have been arrested and charged in connection with a cryptocurrency conspiracy that defrauded investors out of a staggering $722 million. The suspects, namely Matthew Brent Goettsche, Jobadiah Sinclair Weeks, and Joseph Frank Abel, are facing charges related to offering and selling unregistered securities, with Goettsche and Weeks also accused of wire fraud conspiracy.
Details of the Scheme
The trio allegedly operated a fraudulent scheme under the guise of BitClub Network, a cryptocurrency mining operation that they knew to be unprofitable. Through deceptive tactics, they manipulated data on “mining earnings” to entice members to invest more funds into the operation. The scheme, which spanned over four years from April 2014 to December 2018, not only involved the sale of shares in mining pools but also recruitment of new members who were required to pay a $99 joining fee.
According to email exchanges presented in the indictment, the men openly discussed targeting “the typical dumb MLM [multi-level marketing] investor” and admitted to building their model on the backs of unsuspecting individuals.
Allegations by the SEC
In addition to the criminal charges, the US Securities and Exchange Commission (SEC) has accused the suspects of failing to register the shares they were selling with the regulatory body. It is further alleged that they encouraged US investors to use VPNs to hide their true IP addresses, allowing them to evade detection and regulation by US law enforcement.
Legal Consequences
US Attorney Craig Carpenito commented on the case, stating, “The indictment describes the defendants’ use of the complex world of cryptocurrency to take advantage of unsuspecting investors.” He likened their actions to a modern-day Ponzi scheme that swindled victims out of hundreds of millions of dollars. Carpenito assured that, with the collaboration of law enforcement agencies, the perpetrators would be held accountable for their crimes.
As the investigation unfolds, it serves as a stark reminder of the risks associated with the cryptocurrency market and the importance of conducting thorough due diligence before investing in such ventures.