Crypto
A Bitcoin mining startup scammed people out of $720M by exploiting potential returns of investment
Honestly, should we be surprised by this?
A New Jersey-based cryptocurrency startup called BitClub Network allegedly scammed $722 million out of its investors.
The founders of the company are being federally indicted for conspiracy to commit wire fraud and conspiracy to offer and sell unregistered securities. They also created an enormous scam where they exploited a still somewhat unruly tech sector. US Attorney Craig Carpenito comments on the arrest and what they did to accomplish it.
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.
Since January 2019, Business Insider reports that over $4 billion has been embezzled via cryptocurrency scams. However, if you look at the individual numbers from each of the schemers, BitClub (allegedly) Network stole more money than any of them.
A Bitcoin mining startup has scammed over $720M from its users
Image: Blockchain Global
The idea of BitClub Network was a way for anyone to put their money towards mining bitcoin. In turn, the investors would receive a share of bitcoins that were supposedly mined. Investors could put in any amount of money towards it, but it was always preferably cash. But, as any story involving a con goes, nobody received anything back. And the perpetrators would spend it on themselves.
Fortune reports that messages between the founders have been leaked. They remarked how easy it is to get money from gullible folks or how they are “sheep.”
Although, other sites could see the writing on the wall before the arrests occurred. A website named Honest Betting Reviews actually gave its opinion on BitClub Network earlier this year calling it a “scheme” and a “mistake.”
The consequences of committing wire fraud can result in 20 years in prison. The selling of unlisted securities results in five years. Both crimes have a federal fine of $250,000.
What do you think? Surprised by the bitcoin news? Let us know down below in the comments or carry the discussion over to our Twitter or Facebook.
Editors’ Recommendations:
- A Facebook contractor was caught accepting a ton of money to restore banned accounts
- Toys “R” Us can’t make money selling toys so it is selling children’s data
- Google Chrome has a new feature that tells you when your password has been stolen
- Tech Hangover: Apple’s new Mac Pro is very, very expensive
Follow us on Flipboard, Google News, or Apple News
