Pre-trial custody ordered for alleged BitClub crypto Ponzi schemer

Link to order

Alleged crypto Ponzi scheme conspirator Jobadiah Weeks is going to remain in prison until trial, per a recent order entered by a federal judge in Florida.

Weeks was allegedly part of a $722 million crypto ponzi involving something called the BitClub network. Per the Court:

Defendant is alleged to have promoted BitClub Network (“BCN”), which the Government alleges “was a worldwide fraudulent scheme that solicited money from investors in exchange for shares of pooled investment in cryptocurrency mining and that rewarded existing investors for recruiting new investors.” Specifically, per the Indictment, Defendant promoted BCN to potential investors and advised BCN’s owners and operators on how to solicit investments from “sophisticated investors.” Defendants also allegedly conspired to sell unregistered securities.

Weeks was arrested earlier this month and a detention hearing was held on December 17, 2019.

The court ordered Weeks detained until trial, finding that there was a serious risk he’d flee or fail to appear in court if released, and that no conditions would assure his appearance.

Under federal law, there’s a presumption in favor of release before trial. After all, you’re holding someone who hasn’t been proven guilty yet.  So, as the Court explains, “When the United States seeks to detain a criminal defendant pending trial based on his or her status as a flight risk, it must prove by a preponderance of the evidence that no condition or set of conditions will reasonably assure his or her presence at trial.”

Here, the Court looked at Weeks and decided that, um, not a chance:

As part of his extensive travel, Defendant associates with numerous self-proclaimed “anarchists.” He and other “anarchists” have discussed forming their own sovereign nation-state called “Libra Land.” Investors in BCN were to receive automatic citizenship in Libra Land and the nation would trade primarily in Bitcoin. Further, Defendant has sought foreign citizenship in both St. Kitts, which has an extradition treaty with the United States, and Vanuatu, a small South Pacific island nation that has no extradition treaty with the United States. When attempting to obtain a foreign passport, Defendant wrote that he did not want his U.S. passport anymore. He also tried to obtain foreign citizenship for his wife and child. He was unsuccessful in obtaining citizenship from either country. However, Defendant endeavored on more than one occasion to obtain foreign citizenship and relinquish his U.S. citizenship. He has expressed strong dissatisfaction with the United States and has not filed any U.S. tax returns for 2014 through 2017.

Defendant also has a “diplomatic passport” from an alleged charitable organization he is a part of called “Worldwide Sports Network” and, when arrested, had a Mexican voter identification card.

The government also said that Weeks has millions of dollars in cryptocurrency and other assets he could draw from. It was not persuaded that a GPS bracelet or other conditions could reasonably assure his appearance.

It appears that Weeks has been transferred from Florida to New Jersey, where there is no new information on the docket.  It's possible that, when in New Jersey, he might challenge this order, but there's no current evidence of that on the publicly available docket.  

I am personally not a huge fan of pretrial detention for non-violent defendants and a little bit skeptical that this guy, even if he is a total crum-bum (and I am not saying he is or isn't -- he is innocent until proven guilty), could really easily flee the country.

Still, a combination of crypto and lack of interest in staying in the US seems to have earned Weeks an extended stay as a guest of the federal government, before being tried.

Basically, lots of money + lack of ties to or interest in the United States and an affinity for made up countries  = pretrial detention.  (This is not too different than what happened to Ethereum researcher Virgil Griffith, whose initial pre-trial release order was apparently over-ruled by a federal judge in New York -- lack of interest in being a U.S. citizen didn't help, apparently).

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One of the many things that completely astonishes me about stories like this one is the fact that people gave their money to someone who claimed that they were going to get citizenship in the non-existent country of Libra that would use bitcoin as its sovereign currency.  

At the same time, for some reason,  I am also reminded of more recent investment schemes like the HEX token, which touts the promise of a "CD" with 10,000 percent returns in a fictional currency in exchange for ether, which still seem inexplicably to attract interest:

Another day, another delusional get-rich-quick narrative, apparently.[1]  Also, just like this BitClub scheme, the people who brought you HEX also appear to have created ample documentary evidence for a so inclined prosecutor to amble through for support.

For each dubious or fictional narrative (whether BitClub's sovereign nation or the Hex token's so called Certificate of Deposit), I fast forward in my mind to a federal judge looking at the facts and circumstances in the cold light of are you frigging kidding me.  Things that might fly on twitter or medium or discord or whatever have a very different flavor when you pull them from a reported opinion on pacer.  Will I be writing a similar story about the Hex Token and its creators in a year?  I guess time will tell.  

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[1].  h/t to @DanDarkPill on Twitter for flagging this.