SANTA ANA, Calif. (CN) - A so-called Bitcoin-mining company in Orange County defrauded investors of $385,000, six people claim in court.
Linh Cao et al. sued Time Squared Global and its principals Seong Harold Park and Erica Lee on Sept. 24 in Superior Court, alleging fraud, conspiracy and breach of contract.
The investors claim that Park and Lee ran a "sophisticated multi level marketing scam," offering to lease custom-made microchips designed to mine Bitcoins.
There is no central bank for Bitcoin and the electronic currency is unregulated.
People may buy Bitcoins or accumulate them through "mining," in which users solve math equations to record transactions in the electronic currency. Users are rewarded with Bitcoins when they successfully record those transactions in blocks. It becomes more difficult to mine for Bitcoins with each transaction, due to the system's built-in protocol or "proof of work."
"Defendants offered to lease to investors single-unit chips for the period of six months, during which investors were promised daily revenues from the mining of 'Bitcoin' by each chip daily over the six month period of time. Defendants also aggressively promised investors commissions and revenue for bringing in other investors," the states.
But Time Squared Global never delivered the commission or revenue, the investors claim, and the custom microchips probably never existed.
Although the technology may be new, Park and Lee were running an old-fashioned pyramid scheme, in which older investors were paid with money from new investors, the complaint states.
Cao invested $79,360, Mu Jen Chen $76,800, Dung Duong $7,680, Mary Hernandez $56,410, Vincent Ta $136,740 and Li Ching Wang $38,400, according to the lawsuit. They say they paid the money to a Wells Fargo account.
They seek damages, costs, restitution and a court order shutting down the scheme and prohibiting the defendants from getting the money in the bank account.
They are represented by Vinh Tran with the Law Offices of Katherine N. Nguyen.
A telephone call to a number listed at the Time Squared Global website went unanswered Tuesday, and the company did not respond to an emailed request for comment.
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