Ponzi King Caught-Red Handed in Bitcoin Scam

A case has been brought before the court of law in the District of New Jersey after Silviu Catalin Balaci was arrested on charges of conspiracy to commit wire fraud and conspiring to sell unregistered securities through the BitClub Network.

 The Guilty Parties

Initially, Balaci claimed he only had knowledge of one pool operating within the BitClub Network. However, prosecutors have unearthed damning evidence of two more schemes where Balachi and his partner Goettsche refer to fake mining earnings and gloat about building the scheme on the “backs of idiots” in electronic correspondence.

Matthew Brent Goettsche, Jobadiah Weeks, Russ Albert Medlin and Joseph Frank Abel are also named in the lawsuit. It is believed that they scammed investors out of more than $720 million in Bitcoin by conspiring with one another to solicit investments through the BitClub Network using misleading and fraudulent figures.

 Understanding the Scheme

The pyramid scheme,  which ran from April 2014 to December 2019, rewarded members for recruiting more members and gave investors the choice of investing in up to three mining pools.

If correspondence is to be believed, Balaci was initially reluctant to artificially inflate daily mining earnings by 60%, however greed clearly took over as he took up an integral role within the scheme.

According to the United States Department of Justice:

"Defendants Goettsche, Balaci, Weeks, and Abel also conspired to sell BitClub Network shares—which were securities—notwithstanding that BitClub Network did not register the shares with the U.S. Securities and Exchange Commission.  Weeks and Abel created videos and travelled around the United States and the world to promote BitClub Network and recruit others to invest."

So far, only Balachi has been seen before the court, having his first appearance on the 8th of July. He submitted his guilty plea on the 9th of July and has been released on bail to await a court date to hear his fate. At this stage, it is expected that he will be sentenced to up to 5 years in jail or required to pay a fine of up to $250,000.

Meanwhile, Goettsche, Weeks and Abel are currently being detained without bail and no court date has been confirmed as yet.

 No Longer on the Run

After evading law enforcement for almost half a year longer than the rest of his team, the suspected head of BitClub, Russ Albert Medlin, is currently being detained in Jakarta. He was arrested on sex charges after three underage girls were seen leaving his apartment.

Should he be charged for the sex crimes under Indonesian child protection laws, he could face up to 15 years in prison, which may delay extradition proceedings significantly.