Crypto Promoter Admits Role in $700M Mining Ponzi Scheme

A California man admitted Thursday to conspiring to engage in tax fraud and selling unregistered securities linked to Bitclub Network, a dodgy cryptocurrency mining scheme worth $722 million.

Joseph Frank Abel, 50, appeared before the U.S. District Judge Claire C. Cecchi and pleaded guilty to two counts of subscribing to a false tax return for the tax year 2017 and offering unregistered securities.

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The accusation comes as Abel and four co-defendants have been nabbed by US authorities in connection with to the world’s biggest Bitcoin scam. The U.S. Justice Department’s indictment identified BitClub Network as a Ponzi scheme that was obviously run by a gang of international criminals.

Matthew Brent Goettsche, Russ Albert Medlin, Jobadiah Sinclair Weeks, and Joseph Frank Abel have been charged with conspiracy to commit wire fraud. Abel was arrested in December 2019 and the court proceedings against him were conducted via video conferencing.

Abel faces up to 8 years in prison

From April 2014 through December 2019, Bitclub Network solicited money from investors in exchange for shares of purported cryptocurrency mining pools. Abel operated as a large-scale promoter for Bitclub and was rewarded for recruiting new investors into the scheme that was operational for nearly six years.

In connection with his plea, Abel confirmed that during the course of the scheme he created videos, gave presentations and speeches about the BitClub Network throughout the United States, Asia, Africa and Europe. His testimony indicates that although BitClub never ran the lucrative bitcoin mining pools it promoted, he instructed US investors to use a virtual private network, or “VPN,” to hide their actual IP addresses and evade detection and regulation by authorities.

In order to mask the conspiracy, Abel changed the figures displayed in his tax disclosures to hide $1 million in cryptocurrency he earned from his promotion of the BitClub Network.

Under the plea agreement, the conspiracy charge to which Abel pleaded guilty carries a maximum penalty of five years in prison and a fine of $250,000, or twice the pecuniary gain to the defendant or loss to the victims. Further, he faces a maximum three-year sentence and $100,000 fine for tax charges.

A sentencing date has been set on January 27, 2021.

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