A lot of times, they get nailed on old and long-standing investigations when they just happen to be handling Bitcoin, making it look to the uninitiated (and paranoids) that the government is out to get BTC and all other e-currencies when it's just a case of, as said, a toxic community that's forever trying to find a way to game the financial system.
The flat-out scammers stand out like a sore thumb, at least if you are used to dealing with scammers. A lot of Bitcoiners aren't, and while there's a lot of toxicity in the community in terms of sleazy business practices and flat out crazy people, a lot more common is the kind of fools who buy into what are euphemistically called "high yield investment programs" (HYIPs) but are really just plain old Ponzi scams.
Another pretty obvious area for outright scamming and general greed is, or at least was, in selling hardware to people who wanted to get in on the Gold Rush mentality. One of these was an operation called Butterfly Labs, that took "pre-orders" for vapor products that didn't exist and then shipped late or not at all, before finally being raided and prosecuted by the FTC. Rather shockingly, this operation is not entirely shut down despite having been in receivership.
If there were some conspiracy to shut down Bitcoin, pretty much every principal in this company would already be in prison. Or back in prison, I should say, since its founder, Sonny Vleisides, has already done a stint in Club Fed for other unrelated things. Well, partly unrelated. They were also fraudulent.
Like the Ponzi scammers, though, these clowns found tons of people willing to buy into the scam.
Here's why selling Bitcoin hardware is at least questionable, in terms of whether you'd want to buy it. Suppose you have a bunch of Bitcoin mining hardware. You can sell it to other people or, considering it's basically a machine to literally make money, just run it yourself and generate your own money.
Who is going to sell a money making machine for less money than they can make just by keeping it?
Nobody, that's who. So while there are honest and reliable vendors, they're generally going to charge more than the return on investment over the lifetime of the machine. To make money on that, you're basically betting that you're a better judge of the net present value of highly edgy technologies than the people who invented and manufacture them. These machines are well beyond the early stages, where the calculations could be done profitably on a normal CPU, or the subsequent video card-based miners (GPUs were more efficient at the relevant kinds of calculations).
Then there was a stage of miners using Field Programmable Gate Arrays to run the specialized mining algorithms, but even those are now obsolete, with the standard now being ASIC miners, that is, application-specific integrated circuits, meaning that specialized chips are fabricated with the sole purpose of mining cryptocurrencies.
So then you have operations like Butterfly Labs, and they not only sold vaporware and didn't deliver for months or even years, but they got the best of both worlds. They not only sold the hardware but mined with it, too, often mining and collecting Bitcoin from machines customers were already waiting on. Ha ha suckers!
when I wrote that I meant to say they should be paying capital gains taxes which is why this guy is probably being investigated for tax evasion