Romanian man pleads guilty to charge in connection with $722M BitClub Ponzi scheme

A Romanian man pleaded guilty to his role in the BitClub crypto Ponzi scheme on Thursday, according to an announcement from U.S. Attorney Craig Carpentino. Silviu Catalin Balaci was arrested in Germany, where he was living, before pleading guilty via videoconference to a U.S. District judge.

Balaci pleaded guilty to one count of a dual-object conspiracy to commit wire fraud and offer and sell unregistered securities in connection with the BitClub Network. The scheme pooled investor money with a promise to invest it in crypto mining. It also rewarded investors for recruiting others into the Ponzi scheme. Balaci confirmed that the fraudulent effort took in at least $722 million worth of bitcoin from investors, according to the statement.

Balaci faces a maximum penalty of five years and a fine of $250,000. A sentencing date has yet to be set.

The Department of Justice (DOJ) first charged three other men in connection with the BitClub Network in December of last year. Matthew Brent Goettsche, Jobadiah Sinclair Weeks and Joseph Frank Abel were also charged with conspiracy to commit wire fraud and sell unregistered securities. 

Balaci and Goettsche intended to target unwitting investors, according to evidence obtained by the DOJ.

"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,'" said the release.