One out of four men, alleged in a $722 million Ponzi scheme, has pleaded guilty on his charges before а U.S. District Judge. The Romanian programmer Silviu Catalin Balaci, 35, faces a penalty of prison and a fine for a long-running cryptomining fraud with partners.
Defrauding Investors Of More Than $722M
Balaci was arrested earlier in Germany in December 2019. The charges against him allege that he participated in a well-maintained conspiracy to commit wire fraud and a conspiracy to offer and sell unregistered securities to investors.
According to a recent report, the Romanian programmer was involved in the BitClub Network – a Ponzi scheme, allegedly managed by Balaci and co-defendants Matthew Brent Goettsche, Russ Albert Medlin, Jobadiah Sinclair Weeks, and Joseph Frank Abel – all of them charged previously in December 2019.
According to the publication, the BitClub Network operated from April 2014 through December 2019. It solicited assets from a number of investors in exchange for shares of cryptocurrency mining pools. It also promised investors rewards in case they recruit new ones. As per the report, Balaci assisted Goettsche and Medlin in creating and operating the BitClub Network and had the role of programmer in the operation.
The accusation cites Balaci and his partner Goettsche discussing the scheme, and referring to the target investors and “dumb,” “sheep,” and plotted that they would be “building this whole model on the backs of idiots.”
“Bumping Up The Numbers”
During the ongoing scheme, the BitClub Network had assured clients they would be investing in three different Bitcoin mining pools. However, Balaci admitted that he didn’t know there were three of them, operated by the BitClub Network.
Furthermore, the investigation revealed that in February 2015, Goettsche asked Balaci to “bump up the daily mining numbers by 60%”, to which the programmer warned that it is “not sustainable, that is ponzi territory [sic] and fast cash-out ponzi.”
In any case, Balaci has confirmed that while operating, the BitClub Network took at least $722 million worth of Bitcoin from investors.
As CryptoPotato reported, the case against BitClub Network has been on for a while now. After pleading guilty to charges, Balaci faces a maximum penalty of five years in prison and a fine of $250 000.