American pleads guilty in $ 722 million cryptocurrency fraud

A California resident pleaded guilty to a cryptocurrency mining fraud of $ 722 million.

Joseph Frank Abel of Camarillo, California, USA, admitted that he was conspiring to sell unregistered securities and signed a false tax return as part of the BitClub network, BNN Bloomberg reports.

The BitClub Network solicited money from investors in exchange for shares in purported cryptocurrency mining pools and rewarded them for recruiting still more investors, according to the US Attorney’s Office.

The proposed scheme operated from April 2014 to December 2019 and was a high-tech financial pyramid.

Abel and four others accused of the fraud were charged in December last year. One of them, Silviu Catalin Balachi, pleaded guilty in July.

The defendants argued that the funds raised were spent on the purchase of mining equipment and computing power. But the money went into their pockets.

The defendants also provided investors with false information about the income that the mining pool allegedly generates in order to maintain interest in the project.

Law enforcement agencies disclosed the accomplices’ emails. Thus, one of Abel’s co-defendants referred to potential BitClub Network investors as “dumb” and “sheep”, saying he was “building this whole model on the backs of idiots”.

Financial pyramids are actively promoted in the cryptocurrency space, with projects such as BitConnect, OneCoin and others costing investors billions of dollars. Particularly during the 2017 and 2018 initial coin offering boom, many people invested in projects that didn’t have a known team or even a product behind them.

In November 2019, Mark Scott laundered approximately $400 million in proceeds of OneCoin through fraudulent investment funds that he set up and operated for that purpose.