BitClub Network abandon US, on the run from regulators?
One of the tell-tale signs that a share-based MLM opportunity operating in the US is a Ponzi scheme, is failure to register with the SEC.
All it takes is the filing of a few documents and annual reports, and the regulator has all the information to ascertain whether or not an otherwise questionable opportunity is legitimate.
The alternative is a regulatory investigation, which typically results in a civil case being filed and the Ponzi scheme in question shut down.
Possibly looking to preempt such an investigation, BitClub Network have announced they are abandoning US operations.
For those unfamiliar with BitClub Network, the company solicits thousands of dollars in investment for mining pool shares. The shares initially paid out for 1000 days, however the ROI period was recently reduced to 600.
From a March 1st Facebook posting, Here’s how BitClub Network themselves pitch their opportunity:
Sravana XXX: how v will get daily income in bit club?
BitClub Network: Simply purchase a share in one of our mining pools and receive daily bitcoin payouts.
Invest money and collect a passive ROI, otherwise known as a securities offering. BitClub Network aren’t registered with the SEC, so it’s an unregistered securities offering – which is a violation of the Securities Act.
At the time of publication BitClub Network haven’t confirmed the announcement on their website or social media accounts, we instead turn to an April 4th video by Ryan Conley.
[0:09] BitClub Network is going to be closing its doors to US participants, new ones anyways, come May 1st.
Conley doesn’t offer up an explanation for BitClub Network’s decision. He does state however
[2:41] we don’t want the alphabet-soup gangsters, y’know, and the stupid powers the United States has to go ahead and shut us down.
At the time of publication Alexa estimate that around 11% of traffic to the BitClub Network website originates from US, so shutting down there is a significant loss of potential revenue.
On a logical plane the company’s decision makes little sense. If BitClub Network were legitimate then there’d be no issues with registering their securities offering with the SEC.
The required financial statements would prove BitClub Network are above-board, opening up their revenue source(s) to scrutiny.
Since conception, the only source of recorded revenue going into BitClub Network has been affiliate fees and investment.
A US resident himself, Conley laments BitClub Network’s decision but doesn’t seem to fazed:
[0:25] Of course I wish that BitClub Network would still allow us to recruit people from the USA after May 1st, but it’s not the case.
So what do you gotta do with life? You just keep rollin’, rollin’, rollin’. Right?
So, y’know I’m not hung up on it. I got so much stinking international business going on everywhere, I mean uh, South Africa is more on top of this shit than (the) United States anyways.
So I’ll focus on South Africa, China… y’know.
In addition to BitClub Network, Conley also promotes MMM Global – a bitcoin-based cash gifting Ponzi scheme.
The scheme recently attracted the attention of regulators in South Africa. As the investigation continues, bank accounts of participants have been frozen due to money laundering concerns.
BitClub Network’s founders are Zeek Rewards Ponzi veterans, and have previously stated they are “staying anonymous to avoid regulators“.
The “stupid powers” Conley claims the US government has, has seen millions of dollars returned to victims of the $850 million Ponzi scheme.
In his video, Conley claims MMM Global affiliates “haven’t been paid for three weeks”. He suggests BitClub Network affiliates raid MMM Global downlines to fill their BitClub Network binary teams.
Despite MMM Global and BitClub Network going hand in hand, the latter professes it’s not a Ponzi scheme:
Is BitClub a Ponzi Scheme?
A: NO! A ponzi scheme has no product, it’s just a money game set up to pay people with other people’s money and eventually it will crash and burn because there is no real money being earned from any outside sources.
In a sign that BitClub Network might be on the verge of “crashing and burning because there is no real money being earned from any outside sources”, on March 16th the company recently announced a second virtual share mining pool.
The BitClub Network Ethereum Mining Pool goes live in just under an hour!
Shares in this pool are only available to Founder members and are limited to 1,000 total shares. It’s not too late to become a Founder and stake your claim in the Ethereum pool!
How much it costs to sign up as a BitClub Network Founder member and purchase Ethereum pool shares is not disclosed.
Ethereum is the name of the project behind the Ether cryptocurrency launched last year. Ether is publicly traded and currently valued at $10.43 USD.
Update 4th May 2016 – If US-based visitors visit the BitClub Network website, they are now presented with the following message:
BITCLUB NETWORK IS NOT AVAILABLE IN THE UNITED STATES
You are seeing this page because you are attempting to access BitClub Network within the United States
As of May 1st 2016 BitClub Network is no longer offering new memberships to anyone located in the United States or any country/territory controlled by the United States.
Existing US-based BitClub Network affiliates are believed to still be able to access their accounts.
I would like see the SCAMMERS go to jail.
To become a “Founder member” entails buying all three BTC mining contracts, total cost $3500, then you qualify to give them another $1000 for an ETH mining contract.
They claim to have sold out of at least one 1,000 position tranche in ETH mining, the latest crypto fad.
I don’t know if you’ve listened to this, it’s Weeks running his mouth about BitClub in Acapulco. It was ostensibly about the spat with Roger Ver “Bitcoin Jesus” and Conley coat-tailing his rep with twitter tags.
The relevant bit starts around 43.40 in.
soundcloud.com/heryptohow/roger-ver-vs-joby-weeks-sasha-daygame-juan-galt-jeff-berwick
He is obviously very aware of the problem BCN face with selling unregistered securities, so he persists right off with the T&C fantasy that BCN investors are buying a physical ASIC miner, not an investment.
It’s worth listening to for the b*llsh*t that Weeks comes out with.
I cover BCN on BCT here bitcointalk.org/index.php?topic=1152263.80 if you want to have a read.
So that’s a few hundred thousand for them to keep up the charade. What happens after withdrawals exceed investment again, launch of a new crypto pool?
How stupid are their affiliates?
Regarding your point about BCN having no income apart from client’s investments, if you work on the assumption that BitClub Network and BitClubPool are the same entity, then they do have a Bitcoin mining income.
Atm, their stats show an average of 4 blocks mined daily, which is gross ~$40,000 at current prices. This will halve at the ‘halving’, a reduction in mining subsidy preplanned by Satoshi, probably happening in July. Hence the dash for the highly efficient 16nm chip machines which are the subject of possible delay due to flood damage to TSMC’s facilities.
Whether this income is adequate to service the cost of mining, referral commission and roi liabilities is another matter. In Bitcoinland, we call overselling of hashrate “fractional reserve mining” and it’s a common scam.
Officially BCN don’t promise a fixed roi, so as to avoid accusations of a fixed income return, but Weeks mentions ‘expected’ roi regularly.
They claim 4 blocks per day, really…
Blockchain.info estimates that current total hash rate is 1.2 billion GH/s and average is one block every 10 minutes, or 145 blocks a day.
4 blocks a day is roughly 2.8% of daily output. Which suggests they have about 3% of the hashrate.
36 million GH/s per day. Care to guess how much juice it takes to power that, and how much that juice costs?
BitFury’s 16 nm chip claims to scale up to speed up to 0.2j / GH
36 million GH would be 7.2 million joules/s, or 7.2 megawatts… PER DAY.
Not impossible, as you can RENT generators of this size, but the cost?
A kilowatt-hour costs about $0.15 so a Megawatt hour is $150. A Megawatt day is 3600, so a 7.2 megawatt day is… $25920.
And that’s using 16 nm hardware, the MOST efficient available.
And the mining yield is about 40000?
Remember we’re not counting cost of hardware acquisition, network fee, administration, overhead, and so on and so forth. And this is BEFORE the halving due to occur soon.
There is NO WAY BCN can be profitable unless the hardware is FREE and electricity is FREE. The enterprise could not exist the way they claim it does.
Caveat: 15 cents per KW/h is US figure. It *may* be tenable in Iceland, where KW/h is about 6 cents, but there’s no way it can be as profitable as they claim.
Even using 16 nm hardware exclusively, that size mining pool is spending 1/3 of daily yield on operating costs ALONE, NOT counting any startup costs of building the facility and buying the servers and the specialized rig to cool them, AND the internet connectivity and the server admin staff and monitor network and so on and so forth.
If NOT using 16 nm hardware, then the operation is spending 2/3rd of any yield on operating costs, perhaps even 3/4th leaving 10000 day, if that much, to pay startup costs amortized, profit share, admin fee, and salaries for the workers.
Estimates puts the Bitfury data center in Republic of Georgia at cost of 100 MILLION.
Which brings us back to the question… If it’s that profitable, WHY would they even SHARE this with anybody?
@tmfp
BCN is the MLM opportunity. Only recorded revenue is affiliate funds.
BitClubPool might generate some revenue, but as Kasey points out the math doesn’t add up.
Where’s the money coming from? Should be obvious…
Since Conley appreciates the publicity, here’s a reminder:
J Ryan Conley has joined quite a few “different” programs such as Isagenix, Viewtrakr, Staged, Buzztrakr, Kannaway, Brain Abundance, Ingreso Cybernetico, Wake Up Now, YOBN, Jeunesse, OneCoin, BitClub Network, IQKonnect, TSU, Elevate Solar, Solavei, BitClub Network and MMM Global.
His goal is to make money by any means possible by convincing others to join his next “different” scheme.
He admittedly has ADHD, a marriage that’s on the rocks; and, you will notice him selling his belongings whenever money gets tight.
I suggest that more attention is place on BCN as opposed to the promoters. What promoters have promoted in the past has no bearing on the issue of whether BCN is a ponzi or not.
Because an affiliate spews BS or exaggerates is an issue for the affiliate. BCN has already reprimanded individuals who have spread misinformation about BCN. They can only do that when they learn about it.
The people at BCN are largely focused on the mining side of things. Promoters are a different matter. It is not logical to conclude that because an affiliate is dumb, a liar, or over the top, that BCN is dumb, lying, or over the top. It just does not follow.
Now, for some actual third party information on BCN, review the following:
blockchain.info/pools?show_adv=no Third Party validation that BCN is mining 2-9% of the world’s Bitcoin (has been as high as 9 in my experience and is 3% as of this writing).
Business Insider, another third party source, put BCN at 1.33% last year before they brought the BitFury power.
Third Party verifiable evidence of Blocks being hit by BCN: blockchain.info/blocks/BitClub%20Network
More third Party validation from Blocktrail: blocktrail.com/BTC/pool/bitclubnetwork
businessinsider.com/bitcoin-pools-miners-ranked-2015-7?r=UK&IR=T
So, BCN IS mining. It is proven and irrefutable.
They ARE paying a portion of this mining to me and my referrals on a daily basis. Again, irrefutable as I and many people I know earn daily. I own several Founder positions and ALL but ONE have any referrals. ALL are earning Bitcoin DAILY. Real Bitcoin that I pull out to my wallet, and is paid normally within hours of requesting it.
We are all aware of the fact that mining Bitcoin and owning Bitcoin is a SPECULATIVE move and we are all adults and need no regulators or ‘do gooders’ trying to ‘protect’ us. Thank you very much. We can take care of ourselves.
BCN takes no USD or ANY fiat money. We do not function in the economic system and do no damage to anyone. We simple pool our resources, mine Bitcoin, and share the profits, IF ANY, and that’s it.
We can OPTIONALLY share this and earn a little of the POTENTIAL earnings of our referrals. This helps to accumulate more Bitcoin but is not required to benefit in the mining pools, as ALL my Founder positions amply demonstrate.
Keep in mind BCN, is a CLUB, and WE are the owners essentially. There is no ‘company’ to take down or attack and not even a fiat money bank account to seize. BCN resides in the ‘Kingdom of Bitcoin’.
ONLY MEMBERS can buy shares and that makes it a PRIVATE CLUB. Of course, in the US, where regulators make their own rules in order to steal people’s money (like police get 80% of the take when they seize your property), it is just better not to operate in the US which is completely unpredictable.
BCN is not in the US, there are no US directors. There are no USD bank accounts. There are no US companies involved. There are no USD being accepted.
Soon, BCN will turn 100% of its focus away from the US market, which is something several companies are opting to do this days, thanks to US regulators and do gooders.
The world is moving out of the US and into the FREE MARKET where people pay the money and take their chances, as fully grown adults. It is becoming a great disadvantage to operate in the US for companies as well as entrepreneurs and investors who are being cut out of one opportunity after another, because their government wants to ‘protect’ them from ‘danger’ (that always accompanies opportunity).
So, as the USA becomes a world where security trumps freedom, companies and individuals are fleeing to FREE zones where they can operate without interference, for better or worse.
That is the world of free enterprise, something seemingly disappearing in the US market where kids are arrested for selling lemonade on their front lawn.
That doesn’t negate using newly invested funds to pay off existing investors.
Which in MLM with no retail is pyramid scheme territory.
Using newly invested funds to pay off existing investors has nothing to do with bitcoin.
Horseshit. An SEC complaint against the founders and seizure of the website and attached database by a Receiver and it’s gone. The same as any other Ponzi.
Because it’s a Ponzi scheme and they think that’ll stop the SEC from shutting them down.
You can pretend the Ponzi past of those promoting BCN has nothing to do with running from regulators or accept it for what it is. They think this time around they’ve outsmarted the Ponzi police.
Your own anti-SEC rhetoric suggests you’ve been stung before in MLM underbelly schemes. Good riddance and I hope they get you again, and again, and again.
By all means hide offshore… but you cannot beat mathematics. Token mining hardly explains the ROIs and referral commissions offered by BCN, so it’s obviously new investment sourcing the majority of payouts.
Let’s face it, the only reason BCN it hasn’t collapsed yet is the huge maturity period. Same as any scheme, when you all go to cashout kaboom.
Believe what you like. I have provided the evidence. I am paid from mining on ALL my positions but ONE. It is from mining, period. Nothing in my other centres is coming from referrals.
So in other words you don’t give a toss.
You don’t need to recruit to receive newly invested funds in a Ponzi scheme. But yeah, by all means continue to believe 100% of your ROI is from mining.
Best of luck with the scamming.
Other than if said “affiliate” doesn’t DO legitimate and only does ponzi and pyramid schemes AND said “affiliate” is not one of those supposedly “reprimanded”
The great thing about the blockchain is it is a ledger, Everything is there.
Everything apart from a traceable path from newly mined coins at BitClubPool to payments to your (or anyone else’s) BCN wallet.
This decentralized Club image so assiduously promoted…so, how are decisions made regarding capital reinvestment, repayment %’s and their apportionnment? This mythical bunch of mining geeks agree over coffee and pizza?
Nah, multi million dollar businesses, scam or not, don’t work that way.
Re Weeks, Abel, Conley & co. Know someone by their friends.
Re: the “freedom” rhetoric, sounds like MMM lite.
Conley was also big in Zeek Rewards thing and lost a lot of people a lot of money there. His IS one of the usual suspects at this point.
Article updated with new message displayed to US visitors to the BitClub Network website.
As explained before by one of Bitcoins foremost developers Andresson, most mining pools probably *are* ponzi schemes. This is esp. true if you have to buy-in with $$$, instead of contributing hashrates.
Furthermore, these turkeys claimed they are mining Ethereum? If they really are doing it they are stupid. If they’re not doing it they are liars. Ethereum is specifically designed to be INEFFICIENT with special miner hardware.
NOLINKS://github.com/LeastAuthority/ethereum-analyses/blob/master/PoW.md#HardwareFeasibility
Already analyzed before that it’s NOT financially feasible to mine BTC without pre-existing infrastructure, and if they already do, they’d be mining so hard there would be no capacity to “rent out”.
BitClub Network is just a bunch of smokes and mirrors.
This should be very easy to prove. BCN claims the ROI is in mined coins. Many suspect that they are just buying BTC with the new money coming in.
The beauty of cryptocurrency is its transparency. You can track every transaction. You just need to track the ROI coins and see where they came from.
If they came from mining it will be obvious on the blockchain. Get the bitcoin address of received BCN mined coins and then track it on the blockchain. The coins will have a very short lifespan if they were recently mined.
It’s obvious to any critical thinking person where the ROI is coming from… new people’s money. It’s an old game that perpetuates on greed over and over again.
There are legitimate cloud-based BTC mining companies that have far less overhead and fees. Why would anyone pay BCN fees that are jacked up to pay out all their MLM bonuses?
Except to reap the too-good-to-be-true ROI of course.
Bitcoin mining profitability by the BTC veterans cannot support the BCN proposed ROIs. Here is an article explaining why miners struggle to break-even.
coinbuzz.com/2015/03/05/paper-suggests-bitcoin-miners-lose-money/
There is no way that BCN can pay all the mining expenses and the MLM bonsues and generate the profitable mining production. The numbers just don’t add up.
But hey, most people don’t look at the numbers. They just react based on emotions. Greed is a powerful justifier in the face of obvious scams.
So… what happens on 7/10/16 when the BTC mining reward is halved?
OKAY, SO HERE ARE THE FACTS ABOUT BCN…
You can go to BlockChain.info, and view a chart of blocks earned by the various large mining pools at: blockchain.info/pools?timespan=4days
BitClub Network is a recognized bitcoin pool miner that is mining 3.25 blocks per day on average, which is consistent with what BCN says they are mining. So BCN is actually mining bitcoins. So all you naysayers can put down your pitchforks.
Oh! wait a minute…
The numbers don’t quite add up. I received a copy of the mined bitcoins in the BCN back-office from a BCN Founder.
BCN Founders pay $3500 and receive mining from three separate pools. In his back-office it says he has mined a total of 2.2 bitcoins in the last 30 days. (.5 from pool #1, .7 from pool #2, 1.0 from pool #3). 2.2 BTC / 30 days = .073333 BTC. 3.25 BTC mined daily would cover the payout of .07333 BTC to only 1107 Founders.
There is a problem if BCN has thousands of founders and tens of thousands of miners, but their daily mining yield only covers a small fraction of the miners.
They have a shortfall of actual mined BTC compared to what they are reporting to mine in the back-office.
This is a hybrid Ponzi, that actually has a revenue generating product (mining service). But BCN is secretly supplementing actual mined bitcoins to create an illusion of a profitable ROI, with other bitcoins paid into the program by the miners.
The bitcoin mining numbers reported in the back-office are a combination of actual mined coins and supplemented coins to create an ROI illusion.
The question isn’t whether BCN is mining or not. It’s a question of whether the purchased mining services are actually generating the promised ROI. The numbers show a serious shortfall pointing to a fake ROI created from the new money being paid into the program.
An ingenious scheme, but still a Ponzi.
It really starts to unravel when you consider that 30% – 50% of the miner’s profits must be reinvested into more shares. And on July, 10, 2016 @ 10:22pm the BTC mining reward gets halved from 25 BTC to 12.5 BTC. Oops!
Bitclub Network affliates can be sued by their investors in Germany, a Hamburg court judgment says here
netcoo.com/direct-selling/landgericht-hamburg-revshare-berater-fallen-unter-das-vermoegensanlagegesetz-auswirkungen-auch-auf-bitclub-getmyads-questra-etc-moeglich
and here, confirmed as “legally” (Google translated, meaning precedent maybe?) on 9th August.
mlmrecht.de/2016/07/29/landgericht-hamburg-revshare-berater-fallen-unter-das-vermogensanlagegesetz/#more-238
In a case brought against Beonpush by Schulenberg and Schenk, erstwhile OneCoin attack dogs.
Criminal charges are also possible. Far reaching consequences, and all that.
Hey guys, re: this Hamburg legal situation. I think it’s mistakenly being blown off as unimportant . Pls look at it in a bit of depth and let’s talk about it.
Fact: It was a real Court Judgment with a case number (unfortunately unsearchable).
Fact:The Landgericht is a serious Court that decides international issues (such as the Turkish President’s complaint about the infamous poem about him).
Fact: The Landgericht appears to have “flying jurisdiction” status in the German legal system.
What are your thoughts?
BTW, just happened to look at Bob Wood’s post above and the maths are out by a factor of 25. BCN claimed 3.5 blocks (x 25 btc) per day mined, not 3.5 btc, (pre halving).
Isn’t this just some law firm blowing a trumpet? That’s about as far as I looked into it.
As I say, I think it’s a bit more serious than that.
Followed a few German links, it certainly seems to be being treated as more than just S&S publicity.
If Melanie from that never ending German OneCoin thread is reading, could you contextualize this for us pls?
Conspiracy hat on for a moment.
We know S&S and OneCoin have a cozy relationship. If they believe that their OneLife “restructuring” takes them out of harm’s way, then any negative judgments against revsharers can only attract hot German MLM money to the “legit” OC.
Well, as reported it seems that this ruling confirms that ponzi scheme recruiters of Beonpush may be sued by the people they recruit IF they do not make full investment disclosures prior to accepting their money (such disclosures being of the nature of “risky, you could lose all your money etc.”)
Is this a new development or just confirmation of existing law? I can’ tell.
Then it goes on to warn other “recruiter types” in other current schemes that they may have similar potential liability if they do not follow disclosure rules applicable to investments.
Its a step in the right direction.
I think I see where you are going with this which is that the German money will flow out of domestic German schemes elsewhere. Yes, logically so.
The German legal perspective seems similar to the US perspective. Namely, if you sell investments (securities in US parlance) then you you must follow the disclosure laws that pertain to security/investments.
This is how the SEC is empowered to act and hold corrupt MLMs accountable for their schemes in the US.
I applaud the clarification that Germany seems to have provided, such that its clear that the recruited have a personal right of action against the recruiter, but whether that has much practical application is hard to say.
The cost of such litigation being so high and the value and outcome so uncertain that (at least in the US) such actions are rarely undertaken.
If I as a US or German investor sued recruiters like Trudy Gilmond, Faith Sloan, Lemont Silver etc. etc. what actual advantage does that provide me? Is it just throwing good money after bad?
I’m with Hoss. Doesn’t mean much unless somebody files something.
Glad I found this information about BCN and plus the information from bittalk.org
Had a friend who is actually deeply involved in this and other MLMs send the information to me in regards to BCN a few months ago.
I was very close to getting involved, but after some research. I had to wait it out and think on it.
Decided to look into it again, and I can not simply make sense of BCN at all. And I am not willing to fork over 1000s of dollars and take that risk. I rather just buy Bitcoin out right and hold it.
One point no one ever mentions is that BCN sell computer hardware and software.
Companies that do this, like Apple, make a profit on doing so, often around 50% of sale price.
BCN is almost bound to do the same, and if so, they have plenty of profits to pay out to affiliates – no need at all for new investors.
Because
1. You have no proof of any sales taking place.
2. It has nothing to do with the Ponzi scheme.
3. Nobody is buying computer software and hardware from a Ponzi scheme.
Then why solicit investment and generate ROI liabilities in the first place?
1. Yes, I do have proof a sale took place as I was the buyer.
2. It undermines the need for a ponzi scheme as there is plenty of profit to fund all expenditure.
3. If it is as ponzi scheme. You seem to be saying “it is a ponzi scheme, because I say so”
4. To make a profit as Apple and other companies do.
You have no proof of the money you paid for anything was used to pay BCN affiliate ROIs.
Yet here we are, with BCN operating as a Ponzi scheme.
First it was bitcoin mining. Now it’s “we sell pc components.
Give it a break. The only veriable source of revenue entering BCN is and always has been newly invested funds.
Obvious Ponzi scheme is obvious.
Apple isn’t a Ponzi scheme. If you wish to discuss companies with completely different business models to BCN do it elsewhere.
(Ozedit: Please provide proof selling computer parts is used to pay BCN ROIs)
(Ozedit: Offtopic waffle removed)
4. I never said Apple (Ozedit: More offtopic waffle removed)
Gosh now I am totally confused.