They were suspected of dangling from April 2014 to February 2019, trading staggering profits in exchange for investments in the virtual currency bitcoin.
New Jersey Attorney General Craig Carpenito announced Monday (Dec. 9) that three Americans have been arrested for defrauding investors of $722 million (about 650 million euros) through a cryptocurrency fraud.
“The indictment describes the defendants’ intricate use of the cryptocurrency space to mislead unsuspecting investors. What they are believed to have done is nothing more than a modern and sophisticated Ponzi scheme that defrauded victims of hundreds of millions of dollars.”
Two other defendants, who have not been identified, remain at large, he said.
Read about Bitcoin in five questions
The three arrested, two from Colorado and one from California, allegedly promised staggering profits in exchange for investments in the virtual currency bitcoin between April 2014 and February 2019.
They could have enriched themselves by attracting a smoky structure called the BitClub Network, and these new investors spent years while spending their investments.
“Too Big to Fail”
The three often referred to their victims as “dumb” and “sheep,” claiming that “the whole model was built at the expense of idiots.”
In February 2015, one of the defendants would advise one of his associates to inflate expected investment returns by 60% overnight, and his aides would accept this after timid hesitation.
Instead, another defendant would recommend a significant reduction in income in September 2017 in order to, in his words, “retire like a fucking rich man.”
The three also allegedly sold shares in BitClub Network without registering with the U.S. stock market police.
That didn’t stop the defendants from playing a video in which they praised their company’s transparency and assured it was “too big to fail” (“too big to fail”).
Two of the defendants face 20 years in prison and fines of up to $250,000 for computer fraud, and all defendants face five years in prison and fines of up to $250,000 for selling unregistered securities.