Three Arrested in BitClub Crypto Fraud Investigation

Reports from the US confirm that three arrests have made in the investigation into the BitClub Network. This alleged crypto fraud is said to have scammed up to $722 million from investors. It is one of the more serious cases of supposed Bitcoin fraud in recent years.

Crypto fraud investigation leads to three arrests

Girl with white mask holding Bitcoin” (CC BY 2.0) by wuestenigel

What Is the BitClub Network?

This scheme has been around since April 2014. In recent years, there have been numerous social media posts and reports about it. This level of hype caused people from all over the world to invest huge sums of money in it.

The people behind it claimed that the money was going into the purchase of Bitcoin mining equipment. However, investigators believe that it was simply a pyramid scheme.

The idea was that everyone would make money when the machines started to mine coins. Investors were supposedly rewarded for introducing new members to the scheme too. People were encouraged to invest in four mining pools.

The price to enter was listed as $1,000 per GPU share. The BitClub team travelled the world selling the scheme. However, it isn’t clear whether the mining equipment really exists.

What the Crypto Fraud Investigation Has Uncovered

One of the key elements of the BitClub investigation is the string of messages uncovered between the alleged scammers. These messages appear to show that wht started out a small-scale scam rapidly grew in size.

Investigators say that the messages mention them calling investors “idiots, “dumb” and “sheep”. The correspondence also allegedly contains references to boosting the numbers to suggest that huge profits were being made. The suspects are said to have realised that that they had ended up with a “fast cash-out Ponzi”.

What Happens Next?

Reports suggest that the three men under investigation are from Colorado and California in the US. However, other sources suggest that there may be up to five suspects in the BitClub Network case. It seems that two suspects are still to be located.

John Tafur is a Special Agent in the IRS-Criminal Investigation group. He called this a “sophisticated Ponzi scheme involving hundreds of millions of dollars”.

It isn’t yet known what the chances are of recovering some of the money for investors. However, it should certainly act as a warning to other people. Just because a scheme talks about cryptocurrencies and mining isn’t a sign that it is reputable.

It is important to look into any investment opportunity thoroughly. This applies to Bitcoin as much as anything else. Now, it is a question of waiting to see of the people who have lost money to this crypto fraud hopefully get it back.