September 8, 2020
BitClub and their $722 million Ponzi Scheme has been on a tightened noose up until now. Joseph Frank Abel, a BitClub Network promoter, has received money from investors for shares in the BitClub network mining pool unregistered with the US Securities and Exchange Commission (SEC).
In December last year, Abel was accused with four others for being involved in what prosecutors are naming a ‘high-tech’ Ponzi scheme.’ Abel’s alleged co-conspirators are BitClub CEO Russ Medlin, Matthew Brent Goettsche, Silviu Catalin Balaci, and Jobadiah Sinclair. They were charged with wire fraud conspiracy related to the scheme to defraud victims into investing in ‘shares’ of the BitClub Network mining pool, regardless of knowing that it would not be profitable.
The charge alleges that the conspirators went as far as controlling the numbers offered to the investors and convincing them to transfer more money into the scheme. Together with Abel, the defendants are charged with conspiracy to provide and sell unregistered securities in connection with the system.
Based on the accusation, the scheme was scandalous: the prosecutors have submitted evidence of online chats where the conspirators discussed counterfeiting proof of the mining power that never existed. Goettsche offered Balaci a $50,000 bonus ‘to get us “proof” of our own pool by end of month.’ When questioned about their mining activities, Balaci said:
After that, they publicly discussed ‘convincing the morons’ by offering a 5% mining bonus to miners to attract power to their pool.
More damning, as far as Abel is concerned, is correspondence included in the indictment, which shows that Abel and Co. were fully aware that they were offering unregistered securities, with CEO Medlin sending Abel an article about multi-level-marketing schemes, essentially the kind alleged to be run by BitClub. Their likelihood to be offering unregistered securities.
As far as Abel is concerned, the more critical part is the correspondence included in the accusation, which shows that Abel and Co. were fully mindful that they were promoting unregistered securities. CEO Medlin is sending Abel an article about multi-level marketing schemes, this is basically to be run by BitClub, and their probability of proposing unregistered securities.
As Abel disclosed his part in the scheme this week, it will be exciting to see if his co-conspirators are as cooperative as him.
This scandal is a blemish on the digital currency community if the rest of the charges stick, being another case of a bad actor feeling that they existed outside the law’s reaches and convincing unsuspecting investors into signing to a scam.
Notably, the manner that BitClub’s personnel discussed the scheme should be a cause for concern. The service has been used broadly in the community, and the owners are well-connected. In December of the past year, Twitter user @Bitcoin has posted a video where Roger Ver was seen having dinner and an in-depth with BitClub CEO Russ Medlin:
‘Bitclub CEO Russ Medlin seeking strategic advice from @rogerkver and @AntPollOfficial about how to direct BitClub mining power.’.
As of now, Medlin is being held in custody, but he was the last of the defendants that are to be apprehended after flying to Jakarta, where he has arrested another unrelated issue: paying underage girls for sex.
After the indictment, Ver dissociated himself from BitClub Network. However, the tweet still endured, coming with other strange videos where Ver deletes a tweet critical of Bitclub Network with CEO Russ Medlin. Ver was also a part of the November 2018 Hash War, where it has been long speculated that BitClub was used by Ver and his Bitcoin.com mining operation to strengthen their takeover of the BCH ticker representation.