On December 10th, five men were charged with conspiracy to sell unregistered cryptocurrency securities through their company, BitClub Network. The business promised to exchange shares of cryptocurrency mining pools for cryptocurrencies like Bitcoin for their cash. The accused, Jobadiah Sinclair Weeks, Silviu Balaci, Matthew Brent Goettsche and two others whose names have yet to be released, operated BitClub Network between April 2014 to December 2019. They provided their client's misleading figures related to cryptocurrencies that they called “bitcoin mining earnings.”
Cryptocurrencies are digital currencies that are made impossible to counterfeit by complex cryptography. In short, people “mine” coins on a blockchain that can then be exchanged for conventional currencies like dollars or euros or just used directly. Because of their power, cryptocurrencies are highly valuable. For instance, at press time a single bitcoin is worth almost $7,000.
NBC News, who reported the story, notes that Goettsche collaborated with others to orchestrate a falsified record of “bitcoin mining earnings,” periodically telling others to raise or lower the statistics to show investors and warrant their further involvement in hopes of finding more victims.
The idea was that they would market the fake business as a multi-level marketing company and continually misrepresent activity. “We are building this whole model on the backs of idiots,” Goettsche told Balaci, another conspirator. In total, they conned $722 million out of their investors with this scheme and maintained it by refusing to register shares sold with the U.S. SEC. The five men are looking at penalties and fines of $250,000 dollars along with a 20-year prison stay for the fraud conspiracy count, and an additional five years and $250,000 for conspiracy to sell unregistered securities.
Cryptocurrencies have largely dropped out of the public eye since the crypto fever of 2017. Still, they’re another example of the ways that technology has opened up new, alternative ways to make money, while also making new ways to commit crimes. While cryptocurrencies haven’t taken over the world like some may have projected, it’s become a favored method for nefarious actors. Because of this, the technology has been looked at with an increasing amount of scrutiny from the government.
It’s questionable whether this was inevitable, given that cryptocurrencies are a virtual currency without a tie to any nation and operate on a peer-to-peer basis, or just the result of a few bad apples spoiling the bunch for everyone. As with all things, it’s impossible to know if the future will be run by cryptocurrencies. For the time being, it’s not likely that they will become mainstays due to how ungoverned they are.
Source: NBC News
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