A promoter in the BitClub Network Ponzi scheme worth over $700 million has pled guilty and faces up to five years in prison.
Joseph Frank Abel has pled guilty regarding his involvement in the notorious Bitcoin mining scheme BitClub Network worth over $700 million. The development follows the alleged owner’s arrest in June and a Romanian programmer also admitting to his participation in July.
Another BitClub Network Operator Pleads Guilty
According to a statement from the US Internal Revenue Service (IRS), Joseph Frank Abel has admitted via video conference to conspiring to offer and sell unregistered securities and subscribing to a false tax return in connection with his role in BitClub.
The IRS described the Bitcoin mining network’s operations as a “fraudulent scheme that solicited money from investors in exchange for shares of purported cryptocurrency mining pools.” Additionally, BitClub operated as a classic Ponzi scheme as it “rewarded investors for recruiting new investors.”
Abel had a vital role in the project as a large-scale promoter. Despite knowing that the network and its operators haven’t registered the company’s shares with the US Securities and Exchange Commission (SEC), he sold BitClub shares to countless victims.
Abel also admitted failing to report on a Form 1040 US Individual Income Tax Return for the tax year 2017. At the time, the income he earned from his role at BitClub was more than $1 million in cryptocurrencies.
The sentencing is scheduled for January 2021. The maximum penalty for selling unregistered BitClub shares is five years in prison and a fine of $250,000. For his tax charge, he faces up to three years in jail and a fine of $100,000.
BitClub’s Rise And Fall
Although it failed to provide the promised payouts to investors, the Bitcoin mining Ponzi scheme remained active for over five years. From April 2014 to December 2019, BitClub Network managed to defraud at least $722 million from investors, according to the IRS.
However, the number of complaints filed from victims quickly grew. Ultimately, the US Department of Justice, with the assistance of the Federal Bureau of Investigations (FBI), brought down the scheme and charged the alleged operators.
One of them was Russ Albert Medlin. Several reports linked him to be the actual owner of the scheme. He was captured in South Jakarta, Indonesia, where he was also charged with sexual assault on minors.
Shortly after, a Romanian programmer Silviu Catalin Balaci pled guilty for his involvement in the scheme after being arrested in Germany in December 2019. Balaci’s role was similar to Abel as he promoted and sold unregistered company shares. As such, he also faces up to five years in prison and a maximum fine of $250,000.
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