Noted
as far back as May
, BitClub Network defendant Joby Weeks has been flooding his criminal case docket with motions and notices.
Most of the motions aren’t worth reporting on, however in one of the motions Weeks sought to withdraw his guilty plea.
Twenty-four motions filed by Weeks were denied in an October 8th omnibus order.
Specific to withdraw his guilty plea, Weeks (right) argued:
he wasn’t guilty of trading unregistered securities because bitcoin and bitcoin mining equipment are not securities;
he did not have notice that his activities were securities transactions;
he is not aware of any BitClub Network victims;
BitClub Network was a “private membership association” exempt from US financial law; and
because he was living overseas he wasn’t required to pay taxes (specific to tax evasion)
On argument one the court found;
Defendant is not charged with conspiring to trade computer equipment or Bitcoin; he is charged with, and pleaded guilty to, conspiring to promote and sell shares in BCN mining pools.
As an aside, I frequently see this argument from fraudulent investment schemes BehindMLM reports on. Typically the argument is
“but our token is a utility token”, or some variation of “how can our scam be committing securities fraud, is bitcoin a security?”
Like Weeks in this instance, there’s a fundamental misunderstanding of what is and isn’t a security. It’s the
MLM investment scheme
as a whole that is the security. Whatever token or coin the security is offered through is irrelevant.
Unfortunately this never seems to sink in for crypto scammers.
Getting back to the court’s findings;
BCN shares are securities as defined by 15 U.S.C. § 77b(a)(1) and SEC v. W. J. Howey Co., 328 U.S. 293 (1946) (the “Howey test”).
BCN shareholders
(i) invested money;
(ii) in a common enterprise (BCN) in which BCN funded its mining operations with shareholders’ investments;
(iii) shareholders had a reasonable expectation of profits based on the representations of BCN;
(iv) to be derived solely from the efforts of the BCN mining program.
Another tactic Weeks tried on was the also common “it’s not an investment if we don’t call it an investment” argument.
Defendant also appears to argue that BCN shares are not securities because investors bought shares in exchange for Bitcoin, not money, and so there was no “investment of money,” as the Howey test requires.
Courts have found that an investment of Bitcoin, rather than money, satisfies the “investment of money” prong of the Howey test.
This Court agrees, and finds that shares of BCN are securities even if investors purchased them with Bitcoin.
On Weeks’ “I didn’t receive notice” argument;
This position fails for two reasons. First, as discussed in detail above, Defendant was not indicted based on a novel theory of securities law; he was charged with conspiring to offer and sell unregistered shares of BCN, which are securities as defined by the Howey test.
Second, Section 5 of the Sec
🤖 Quick Answer
What happened with Joby Weeks' 24 motions in the BitClub Network criminal case?On October 8, a U.S. federal court issued an omnibus order denying all 24 motions filed by BitClub Network defendant Joby Weeks. Among the denied motions was Weeks' request to withdraw his guilty plea, in which he argued that bitcoin and mining equipment are not securities, that BitClub Network was a private membership association exempt from U.S. financial law, and that he owed no taxes while living overseas.
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