A major scandal broke out in the United States, when three individuals were arrested and prosecuted for committing fraud on crypto-assets. The three men are facing multiple years in prison, and a significant fine, for their part in a crypto-asset mining scheme that caused investors to lose over 722Mn Dollars.
What Happened with the Crypto-Assets?
According to an announcement released by the Department of Justice, or DOJ, the three men that were accused are Matthew Brent Goettsche, Jobadiah Sinclair Weeks, and Joseph Frank Abel. Two of the criminals are residing in Colorado and one of them is in California.
In reliance of the US Attorney Craig Carpenito, he stated “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.”
Both Goettsche and Weeks have been prosecuted under the charges of conspiracy to commit wire fraud and all three men are prosecuted under the charges of conspiracy to provide and sell unregistered and unregulated securities.
What Happens to the Three Criminals?
Due to the high-tech crimes that occurred, the prosecuted individuals are facing a significant fine of 250,000 dollars for each crime that they are charged with. Along with the fine, the three individuals are facing twenty years and another five years on the count of wire fraud, and trading of unregistered and unregulated securities.
The three individuals were responsible of running a scheme, known as BitClub Network that was launched in the middle of 2014 until their arrest in 2019. Their aim was to attain money from traders of crypto-assets, exchanging them for shares of cryptocurrency mining pools. They also established a reward system, where investors who brought others to the scheme, would receive a reward.
According to Paul Delacourt, who is the assistant director responsible for the FBI Field Office in Los Angeles stated, “Those arrested today are accused of deploying elaborate tactics to lure thousands of victims with promises of large returns on their investments in a Bitcoin mining pool, an advanced method of profiting on cryptocurrency,”
The three individuals await their sentence, since they are currently waiting for their trial of being charged for crypto-asset fraud, making investors lose over 722Mn dollars.