Three men were charged with helping run a $722 million cryptocurrency fraud that amounted to a “high-tech Ponzi scheme,” U.S. Attorney Craig Carpenito in New Jersey said in a statement.
Prosecutors said that, from 2014 until this month, the defendants operated BitClub Network, which solicited money from investors in exchange for shares in purported cryptocurrency mining pools and rewarded them for recruiting new investors.
Matthew Brent Goettsche, 37, Jobadiah Sinclair Weeks, 38, and Joseph Frank Abel, 49, were arrested Tuesday and charged with conspiracy, according to Carpenito’s statement. Two more defendants, whose names weren’t disclosed, remain at large.
According to the statement, Goettsche referred to potential BitClub Network investors as “dumb” and “sheep,” saying he was “building this whole model on the backs of idiots.” In September 2017, Goettsche sent an email to a co-conspirator in which he suggested BitClub Network would allow him to “retire RAF!!! (rich as f*ck),” prosecutors said.
Goettsche and Weeks are charged with conspiracy to commit wire fraud, while all three men are facing charges of conspiracy to sell unregistered securities.
Lawyers representing the three named defendants couldn’t immediately be located. They’re expected to appear in court on Tuesday, Carpenito said in the statement.
The case is U.S. v. Goettsche, 19-cr-00877, U.S. District Court, District of New Jersey (Newark).
More must-read stories from Fortune:
—2020 Crystal Ball: Predictions for the economy, politics, technology, etc.
—Russia and China built a new gas pipeline. It has everything—except profit
—5 cocktail trends to watch for 2020
—A roundtable of investing experts share their best advice for 2020
—The ‘princess’ and the prisoner: How China’s Huawei lost public support
Subscribe to Fortune’s Eye on A.I. newsletter, where artificial intelligence meets industry.
