A CONVICTED paedo raked in $722million thanks to the world’s biggest Bitcoin scam, according to a report.
The accusation comes as four men have been nabbed by US authorities in connection with the dodgy cryptocurrency mining scheme.
But questions have been raised about a fifth man - Russ Medlin - a pervert at the helm of BitClub Network, the cryptocurrency firm under investigation in America.
US Attorney Craig Carpenito alleged that his four arrested BitClub colleagues had "used the complex world of cryptocurrency to take advantage of unsuspecting investors.
“What they allegedly did amounts to little more than a modern, high-tech Ponzi scheme that defrauded victims of hundreds of millions of dollars.
"Working with our law enforcement partners here and across the country, we will ensure that these scammers are held to account for their crimes.”
Matthew Brent Goettsche, 37, of Lafayette, Colorado, and Jobadiah Sinclair Weeks, 38, of Arvada, Colorado, are charged by indictment with conspiracy to commit wire fraud.
Goettsche, Weeks, and Joseph Frank Abel, 49, of Camarillo, California, are charged with conspiracy to offer and sell unregistered securities.
A fourth defendant, Silviu Catalin Balaci, has been arrested in Germany.
But an unnamed fifth defendant "remains at large, and their identity remains under seal," said Mr Carpenito.
However, a report by The Daily Beast points out that Medlin is one of the firm's "only leaders not facing federal charges".
The website says that Medlin, "a convicted sex offender for child porn and sexual assault of a minor under 14, sat at BitClub Network's head".
While BitClub Network (BCN) "made sky-high profits, customers lost so much money that at least one lodged death threats against the company".
According to an online petition launched to warn people off investing in the cryptocurrency, investors were being “offered fake, non-existent profits.
“They promise ridiculous returns of 20%, 40%, 100% and 200% in a matter of days.”
However, those asking for a withdrawal are given “excuses such as malware attack, and will ask you to upgrade your account, which will cost you $1,500".
According to documents filed in this case and statements made in court, from April 2014 until December 2019, the defendants operated BitClub Network.
It's described as a "fraudulent scheme that solicited money from investors in exchange for shares of purported cryptocurrency mining pools and rewarded investors for recruiting new investors."
Paul Delacourt, Assistant Director in charge of the FBI’s Los Angeles office, said: "The defendants allegedly made hundreds of millions of dollars by continuing to recruit new investors over several years while spending victims' money lavishly.”
The defendants were allegedly involved in a "sophisticated Ponzi scheme involving hundreds of millions of dollars that preyed upon investors all over the world".
This was a classic con game with a virtual twist; false promises of large returns for investing in the mining of Bitcoin.John Tafur, Special Agent
John Tafur, Special Agent in charge, IRS Criminal Investigation, Newark, added: “This was a classic con game with a virtual twist; false promises of large returns for investing in the mining of Bitcoin."
It's alleged that Goettsche discussed with his conspirators that their target audience would be “dumb” investors.
He referred to them as “sheep,” and said he was “building this whole model on the backs of idiots," according to the court documents.
The US Attorney alleges that "Goettsche, Weeks, and others obtained the equivalent of at least $722 million from BitClub Network investors."
Goettsche told one of his colleagues to "bump up the daily mining earnings starting today by 60 per cent".
He was warned it was "not sustainable" and "Ponzi territory".
Goettsche later emailed to suggest that Bitclub Network "drop mining earnings significantly starting now", so that he could “retire RAF!!! (rich as f***).”
The wire fraud conspiracy charge carries a maximum potential penalty of 20 years in prison, and a fine of up to $250,000.
The conspiracy to sell unregistered securities charge carries a maximum penalty of five years in prison and a fine up to $250,000.
The Sun Online attempted to phone BitClub in Iceland, but the line went dead.
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