Programmer admits to helping create cryptocurrency scam BitClub Network

Maria Nikolova

Silviu Catalin Balaci pleaded guilty to a superseding information charging him with one count of a dual-object conspiracy to commit wire fraud and to offer and sell unregistered securities.

Silviu Catalin Balaci, a Romanian programmer, has admitted to conspiring to engage in wire fraud and offering and selling unregistered securities in connection with his role in the BitClub Network, a cryptocurrency mining scheme worth at least $722 million.

Balaci and four co-defendants – Matthew Brent Goettsche, Russ Albert Medlin, Jobadiah Sinclair Weeks, and Joseph Frank Abel – were charged previously by indictment in December 2019 in connection with the scheme.

From April 2014 through December 2019, the BitClub Network operated as a fraudulent scheme that solicited money from investors in exchange for shares of purported cryptocurrency mining pools and rewarded investors for recruiting new investors into the scheme. Balaci assisted Goettsche and Medlin in creating and operating the BitClub Network and served as a programmer for the BitClub Network.

As a part of the scheme, Balaci and Goettsche discussed that the target audience for the BitClub Network would be “dumb” investors, referred to them as “sheep,” and plotted that they would be “building this whole model on the backs of idiots.” The BitClub Network told investors that they could invest in three different bitcoin mining pools; however, Balaci admitted that, at no point during the conspiracy was he aware of the BitClub Network operating three separate bitcoin mining pools. Balaci admitted that he, at Goettsche’s behest, changed the figures displayed as bitcoin mining earnings to make it appear that the BitClub Network was earning more than what was actually being mined.

In connection with his plea, Balaci confirmed that during the course of the scheme, the BitClub Network took at least $722 million worth of bitcoin from investors.

The charge to which Balaci pleaded guilty carries a maximum penalty of five years in prison and a fine of $250,000, or twice the pecuniary gain to the defendant or loss to the victims. A sentencing date has not been set.

Read this next

Digital Assets

10 crypto exchanges reportedly filed with Korean regulators

Only 10 cryptocurrency exchanges in South Korea have filed with the nation’s regulators to continue their businesses in the country. Out of this figure, the local industry media have identified the four biggest crypto exchanges – UPbit, Bithumb, Coinone and Korbit.

Industry News

With a New $36 Million Bounty, SEC’s Whistleblower Compensation Tops $1.1 Billion

The Securities and Exchange Commission on Friday said the total amount of payouts under its whistleblower program had topped $1.1 billion after the agency awarded $36 million to a tipster for flagging wrongdoing.

Retail FX

Bridget Messer Leaves IG Group after 16 Years

IG Group is parting ways with Bridget Messer, who held both CCO and executive director roles for the UK online trading specialist, according to a regulatory filing with Companies House.

Digital Assets

tZero Expands Cryptocurrency Offering With Five New Altcoins

Overstock.com’s blockchain subsidiary tZero today announced in a corporate statement that it added more popular cryptocurrencies/tokens to its proprietary platform. Effective October 4, tZero will support Bitcoin Cash (BCH), Stellar Lumen (XLM), Cardano (ADA), Compound (COMP), and Uniswap (UNI).

Digital Assets

China bans all crypto transactions ‘again’

The People’ Bank of China (PBOC), which is the central bank of China, has said that all crypto-related transactions in China are illegal and has once again reiterated its resolve to crack down on the crypto market.

Digital Assets

What has Ripple (XRP) been up to this week? A lot!

Ripple is far from stuck in the XRP lawsuit. The blockchain firm has announced partnerships in CBDCs and payments, its digital asset continues to be listed on high-profile exchanges, and the lawsuit is rippling through.

Industry News

SEC charges quant analyst for $8.5 million front-running scheme

The front-running scheme was allegedly concealed by executing the trades in the account of his wife, Maryna Arystava, who uses a different last name. This potentially allowed the fraud to last longer.

Industry News

Genesis appoints Billy Morris as CFO and opens Dublin office for low-code/no-code platform

Genesis helps firms to build software significantly faster than if they had started from scratch, with less code and at a lower cost, while simultaneously catering for a range of simple and complex financial use cases.

Industry News

Strike API Partners with Twitter to power instant payments with Bitcoin

Strike, one of the leading digital asset wallets built on the Bitcoin Lightning Network has announced the launch of its Strike API platform to serve various marketplaces and merchant businesses.

<