On December 10, it has been reported from the Department of Justice that BitClub Network promised massive rates of return in exchange for investments in a shared cryptocurrency mining pool. The parties at the center of the scheme allegedly misappropriated over $722 million of those funds into their own lavish living rather than the promised mining pool.
Authorities accuse the three men arrested for falsifying information on returns in order to solicit more investment.
However, the three accused are Matthew Goettsche and Jobadiah Weeks, both from Colorado; and Joseph Abel from California. Authorities are charging Goettsche and Weeks with conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison, as well as conspiracy to offer and sell unregistered securities.
On the other hand, Abel, who was apparently less central to the scheme, has only been charged with conspiracy to offer and sell unregistered securities, a charge that carries a maximum prison term of 5 years.
It has been reported that additional conspirators have not been named or charged with crimes.
This is not the first indication that BitClub may not be a fully above-board operation. Back in 2016, 99Bitcoins, a crypto news outlet, warned against investing in BitClub, despite removing an earlier “scam” label from the company.
Ofir Beigel, the author, explained:
“After gathering the facts I can’t prove that Bitclub network is a scam beyond a shadow of a doubt. I do however still think that Bitclub Network’s business model is lacking and wouldn’t invest in it personally.”
Source: 99bitcoins.com | cointelegraph.com