US Authority arrested three men in connection with a $ 722 million BitClub crypto mining pool fraud that amounted to a “high-tech Ponzi scheme.”
11 December, 2019 | AtoZ Markets – From 2014 to this month, the men exploited BitClub Crypto mining Network. It solicited money from investors in exchange for shares in alleged cryptocurrency mining pools. Also, it rewarded them for recruiting new investors, according to the prosecutors.
BitClub Crypto Mining Pool Scam
On Tuesday, US arrested Matthew Brent Goettsche, 37, of Lafayette, Colorado, and Jobadiah Sinclair Weeks, 38, of Arvada, Colorado. And they involved with conspiracy of crypto mining pool fraud said prosecutor Craig Carpenito in New Jersey. Two other defendants’ names have not been revealed, are still at large.
Mr. Goettsche called potential BitClub Network investors as “dumb” and “sheep.” He “built all this model on the backs of idiots,” according to the statement. In September 2017, Goettsche sent an e-mail to a co-conspirator in which he suggested BitClub Crypto mining Network would allow them to “retire RAF” prosecutors said.
US Authority charge Goettsche and Weeks with conspiracy to commit an electronic fraud. Additionally, US Authority accused the three men of conspiracy to sell unregistered securities. The lawyers representing the three named defendants accused could not be located immediately. Their initial appearances in court are on Tuesday, Carpenito said in his statement.
Bitcoin mining is a process by which “miners” can gain newly issued bitcoin by using special software to solve complex algorithms. BitClub Network claimed to pool investor money to buy mining equipment and computer capacity, and then distribute the profits, according to the government. Instead, the group reported false profits and defrauded its investors, prosecutors said.
Prosecutors Also Brought Other Fraud Cases Involving OneCoin
Prosecutors have also lodged complaints of fraud in cases involving OneCoin, a bitcoin rival. Three weeks ago, in New York, a lawyer was found guilty of laundering $ 400 million worth of OneCoin fraudulent cryptocurrency. Prosecutors said that was working like a Ponzi scheme, in which it promised investors unrealistic returns. And the first investors are paid with the money of the following investors.
Mark Scott was convicted on November 21 of conspiracy to commit money laundering and bank fraud. That was after three and a half hours of jury deliberations. Prosecutors also said Scott had created a phony investment fund. He had used to process money from Ruja Ignatova, the Bulgarian woman who co-founded OneCoin Ltd. However, Ignatova disappeared in 2017 when the police suspected OneCoin.
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