Home Earn Bitcoin A $722 million ‘too big to fail’ crypto Ponzi scheme just failed miserably – Mashable

A $722 million ‘too big to fail’ crypto Ponzi scheme just failed miserably – Mashable

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Who would have thought.
Image: MARK GARLICK / getty
By Jack Morse

Just because you’re fraudulently raking in hundreds of millions of dollars doesn’t mean you have to be such a jerk about it. 

It’s clear no one passed this message along to the three men arrested today for their alleged part in a $722 million globe-spanning cryptocurrency Ponzi scheme. In a Dec. 10 press release from the Department of Justice, the men stand accused of a years-long effort to fool investors into believing they ran a bitcoin mining pool — all the while disparaging anyone stupid enough to believe their supposed lies.   

Starting in 2014, Matthew Brent Goettsche and Jobadiah Sinclair Weeks, both of Colorado, along with Joseph Frank Abel of California, allegedly ran BitClub Network — a service that promised to take investors’ money and put it toward mining cryptocurrency. 

“You can buy into pools for $500, $1,000 or $2,000,” explains the website. “Each contract lasts for 1,000 days, during which you’ll receive your share of the currency we mine.”

“We are building this whole model on the backs of idiots.”

The idea, at least on the face of it, was that investors would earn returns based on the bitcoin mined by BitClub Network. 

That’s not exactly how it worked out. 

In reality, the DOJ insists BitClub Network was not putting investors’ money toward mining equipment and was, instead, a huge scam.

Around January of 2015, the indictment notes that Goettsche told an individual (whose name has been redacted) that the plan was “building this whole model on the backs of idiots” and to “prove the mining … just means convincing the morons :).” 

But wait, it gets worse. “In or around July 2014,” the indictment continues, “as part of an online chat exchange, [redacted] told GOETTSCHE that BCN’s target audience would be ‘the typical dumb MLM investor.'” 

A peppy video on the BitClub Network site was, apparently, meant to convince those very dumb investors that everything was above board.

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“The more people you share BitClub with, the greater your earning potential,” intones the cheery voiceover. 

To knock this entire thing even further into the realm of seemingly obvious scam, according to the DOJ press release, Abel told investors that the entire operation was “too big to fail.”

Unfortunately, not everyone noticed the giant red flags. Real people invested in the alleged scam, and millions were lost as a result. 

It's so easy, you don't even need shoes.

It’s so easy, you don’t even need shoes.

Image: screenshot / bitclub network

Both Goettsche and Weeks are charged with conspiracy to commit wire fraud, and all three of the men are charged with conspiracy to offer and sell unregistered securities. 

Two alleged co-conspirators have not been arrested, and are not named in the indictment.  

“What they allegedly did amounts to little more than a modern, high-tech Ponzi scheme that defrauded victims of hundreds of millions of dollars,” U.S. Attorney Carpenito is quoted as saying in the DOJ press release. 

It looks like Goettsche might need to adjust his stated plan to “retire RAF!!! (rich as fuck).” If he’s interested, we know of a few great investment opportunities.  

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