Law enforcement has taken three men into custody over what sources are calling the biggest crypto scam in history.
The “Biggest” Scam Is in the Books
Matthew Brent Goettsche and Jobadiah Sinclair Weeks from Colorado along with Frank Abel from California have been arrested for initiating a cryptocurrency scam through a fake company called Bit Club Network that may have cheated investors out of $722 million in crypto funds. If the numbers are accurate, Bit Club outdoes the money stolen or lost in both the Coincheck and Mt. Gox fiascos.
The men are presently facing charges of fraud, conspiracy, and attempting to sell unregistered securities, which aside from jail time, is likely to result in a serious penalty dished out by the Securities and Exchange Commission (SEC).
U.S. Attorney Craig Carpenito explained:
The indictment describes the defendants use of the complex world of cryptocurrency to take advantage of unsuspecting investors. What they allegedly did amounts to little more than a modern, high-tech Ponzi scheme that defrauded victims of hundreds of millions of dollars. Working with our law enforcement partners here and across the country, we will ensure that these scammers are held to account for their crimes.
It is alleged that the men responsible may have been scamming people since 2014. The scheme involved targeting investors and persuading them to invest in their company in exchange for digital shares of a cryptocurrency mining pool. In addition, those who brought their friends or associates onboard as investors were eligible to receive larger rewards.
The men also produced several videos and traveled across the globe to promote Bit Club Network, telling investors that the business was either “too big too fail” or was one of the most “transparent” companies in the “history of the world.” All three men are set to make their initial court appearances within their own districts. The charges carry maximum prison sentences of roughly 25 years, along with financial penalties of approximately half-a-million dollars.
Two other men have been identified as conspirators involved with Bit Club, though at press time, they remain at large, and police officials are not revealing their identities to the media.
The suspects have been accused of utilizing several tactics to dupe investors into giving money to Bit Club. Sadly, none of the funds were used for company purposes and were instead spent on personal expenditures, while investors received none of the returns they were promised.
It’s Been a Huge Year for Crypto Crime
Goettsche allegedly told his fellow conspirators that the company was to be built on the “backs of idiots,” and that all should be targeting “dumb investors.”
Crypto scams have made serious news this year and have occurred in several countries including Thailand and Uganda. The former involved Chinese nationals engaged in a cold-calling scheme, while the latter centered around a phony crypto exchange.