Three Men Arrested in Connection to $722M Cryptomining Scheme (Dec 12, 2019)
The U.S. Attorney’s Office for the District of New Jersey announced the arrests of three men in connection with a cryptomining scheme that defrauded investors of $722 million. Matthew Goettsche and Jobadiah Weeks of Colorado and Joseph Abel of California were arrested on suspicion of conspiracy to commit wire fraud, and are accused of having offered and sold unregistered securities. According to court documents, the “BitClub Network” scheme the men operated between April 2014 and December 2019 solicited money from investors for shares in cryptomining pools. The men provided false and misleading earnings figures to deceive investors, and sold BitClub Network securities which were not registered with the U.S. Securities and Exchange Commission. In a statement released by the U.S. Department of Justice, U.S. Attorney Craig Carpenito called the BitClub Network a “modern, high-tech Ponzi scheme” with the intent of defrauding victims of hundreds of millions of dollars. The men face prison time and as much as $500,000 USD in combined fines for the conspiracy and unregistered securities charges.
Recommendation: Investing in cryptomining pools can be profitable, but as with all technology investments, heavy research should be done before handing over your hard-earned money. Understanding the risks of fraud and abuse in the cyprtocurrency realm, and understanding best practices, will help to defend a potential investor from being injured in a high-tech scheme as this story portrays.
Indicators of Compromise (IOCs) associated with this story can be viewed by ThreatStream users here to identify potential malicious activity.