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The accomplice in an alleged $ 722 million Bitcoin Ponzi program pleads guilty

July 10, 2020

One in four men accused of cheating investors over $ 722 million through a long-standing cryptocurrency mining program pleaded guilty.

The only one, A 35-year-old Romanian programmer named Silviu Catalin Bacali was arrested in Germany in December 2019. He was charged with a conspiracy to commit wire fraud and a conspiracy to offer and sell unregistered securities. He faces a maximum of five years in prison and a fine of $ 250,000.

Three other people, Matthew Brent Goettsche, Russ Albert Medlin, Jobadiah Sinclair Weeks and Joseph Frank Abel, were indicted in the same month in connection with the plan in the United States.

The accomplice in an alleged $ 722 million Bitcoin Ponzi program pleads guiltyThe accomplice in an alleged $ 722 million Bitcoin Ponzi program pleads guilty

Prosecutors say the system, which runs between April 2014 and December 2019, has requested money from investors in return for shares in alleged cryptocurrency mining pools. Investors received bonuses for recruiting more investors in the network.

The indictment quotes the correspondence between Goettsche and Balaci in which they allegedly discussed how to pretend mining profits and called their investors “sheep”.

While the other defendants reportedly offered investors the opportunity to invest in three separate Bitcoin mine pools (BTC), Bacali admitted that he himself didn’t know that the BitClub network operated more than one group.

The additional correspondence between the programmer and Goettsche in 2015 apparently resulted in Bacali being asked to “increase today’s daily mining profits by 60%”, which he rejected as “unsustainable” and “ponzi teritori”. .

However, He is accused of having changed the numbers to mislead investors under the influence of his accomplice. Bacali has also confirmed the prosecutor’s allegation that the program had escaped BTC’s investor of at least $ 722 million.

Early warning sign

In March 2017, Cointelegraph reported allegations that BitClub had launched a malleability attack on the Bitcoin network. The system was classified as suspicious by Cryptocurrency Outlet 99Bitcoins in 2016.