Promoter of BitClub Network pleads guilty to charges of conspiracy to offer and sell unregistered securities

Maria Nikolova

Joseph Frank Abel admits to securities and tax offenses related to $722 million Bitclub Network scam.

Joseph Frank Abel today admitted to conspiring to offer and sell unregistered securities and to subscribing to a false tax return in connection with his role in the BitClub Network, a cryptocurrency mining scheme worth at least $722 million.

Abel, who is among the defendants charged by indictment in December 2019, pleaded guilty by videoconference before U.S. District Judge Claire C. Cecchi to count two of the indictment, charging him with conspiracy to offer and sell unregistered securities. He also pleaded guilty to a separate information charging him with subscribing to a false tax return for the tax year 2017.

From April 2014 through December 2019, the BitClub Network was a fraudulent scheme that solicited money from investors in exchange for shares of purported cryptocurrency mining pools and rewarded investors for recruiting new investors into the scheme. Abel operated as a large-scale promoter of the BitClub Network. He promoted and sold shares of BitClub Network despite knowing that the network and its operators did not file a registration statement to register shares with the U.S. Securities and Exchange Commission.

Abel admitted taking money from investors in exchange for shares of the BitClub Network’s purported mining pools. In order to promote shares in the BitClub Network’s mining pools, he created and posted videos to the internet and gave presentations and speeches about the BitClub Network throughout the United States and numerous other countries, including in Asia, Africa, and Europe. As part of the conspiracy, Abel instructed investors in the United States to use a virtual private network, or “VPN,” to hide their U.S.-based IP addresses and evade detection and regulation by U.S. law enforcement.

Abel admitted failing to report on a Form 1040 United States Individual Income Tax Return for the tax year 2017 approximately $1 million in cryptocurrency as income he earned from his promotion of the BitClub Network.

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. The tax charge to which Abel pleaded guilty carries a maximum penalty of three years in prison and a fine of $100,000.

Sentencing is scheduled for January 27, 2021.

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