- The prosecutors called the scam a “high-tech Ponzi scheme” run by the “BitClub Network.”
- The scheme was conducted from Passaic, New Jersey and comprised a “worldwide fraudulent scheme.”
According to an announcement by the Justice Department, the US authorities have taken three men into custody. The accused have allegedly raised $722 million from investors who were lured by fake Bitcoin mining earnings. The prosecutors called the scam a “high-tech Ponzi scheme” run by the “BitClub Network,” which collected money from investors and rewarded them for recruiting new shareholders.
As per the statement, the group attracted investors from April 2014 through December 2019. They reportedly attracted investors using fraudulent earnings purported to come from the network’s mining pool. According to an indictment signed by US Attorney Craig Carpenito of New Jersey, the scheme was conducted from Passaic, New Jersey and comprised a “worldwide fraudulent scheme.”
Matthew Brent Goettsche, one of the accused, labeled the investors as “dumb.” The Justice Department reported that Goettsche was “building the whole model on the backs of idiots” as he guided others to manipulate the figures.
Paul Delacourt, assistant director with the FBI’s Los Angeles office, said that the defendants “are accused of deploying elaborate tactics to lure thousands of victims with promises of large returns on their investments in a bitcoin mining pool.” He said:
The defendants allegedly made hundreds of millions of dollars by continuing to recruit new investors over several years while spending victims’ money lavishly.
The Justice Department has charged Goettsche and Jobadiah Sinclair Weeks with conspiracy to offer and sell unregistered securities. Both the individuals hail from Colorado. Along with them, Joseph Frank Abel of California is also taken into custody. Justice Department officials stated that the other two members are yet to be caught and their identities are not being disclosed.
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