Federal prosecutors have charged five individuals linked to the BitClub Network, a cryptocurrency scheme accused of defrauding investors out of $722 million. Matthew Brent Goettsche, 37, of Lafayette, Colorado, and Jobadiah Sinclair Weeks, 38, of Arvada, Colorado, face charges of conspiracy to commit wire fraud. Goettsche, Weeks, and Joseph Frank Abel, 49, of Camarillo, California, are also indicted for conspiracy to offer and sell unregistered securities. Goettsche and Weeks have been arrested. Two other alleged conspirators remain at large, their identities protected by court seal.
The Department of Justice identifies Goettsche as a co-creator of the BitClub Network. Weeks and Abel are described as promoters for the operation. Abel, in particular, was reportedly still promoting fraudulent ventures such as Dunamis Mining and Onyx Lifestyle as recently as last week. One of the sealed defendants is also credited as a co-creator, while the other co-creator served as the network's programmer.
The indictment details BitClub Network as a $722 million Ponzi scheme. Since its launch in 2014, the operation falsely claimed to share profits from cryptocurrency mining. Instead, the conspirators sought to enrich themselves by soliciting investments through materially false pretenses and deceptive promises. Internal communications reveal that the founders understood the purported mining operations would not be profitable. This mining facade was intended solely to induce investors to purchase memberships and shares in the mining pools.
Evidence of fraudulent intent dates back to the scheme's inception. Emails exchanged between founders show a sealed defendant gloating to Goettsche about the multi-level marketing structure. This defendant noted that the margins from the MLM side would be "insane" due to Goettsche's skill in designing matrices that offered little chance of significant payout for most participants. Goettsche himself reportedly stated in a 2014 online chat that BitClub Network's target audience was "the typical dumb MLM investor."
Further evidence of deception comes from an exchange in October 2014, just two months after the initial public review of BitClub Network. Goettsche and a sealed defendant discussed fabricating mining statistics to spur investment. Goettsche's message read, "but we may need to fake it (mining profits) for the first 30 da." This admission suggests a deliberate plan to mislead investors from the outset.