Tag: scheme

Romanian Programmer Confesses to Orchestrating BitClub Crypto Scam Worth $722 Million

Silviu Catalin Balaci, a 35-year old Romanian citizen living in Germany, has confessed to helping create BitClub Network, a crypto mining Ponzi scheme that siphoned off investors’ funds worth $722 million.

As per the announcement by U.S. Attorney Craig Carpenito, the Romanian computer programmer Silviu Catalin Balaci has admitted to conspiring to carry out wire fraud by aiding the sale of unregistered securities through the BitClub Network Ponzi scheme.

Plea made via videoconference

Following the revelation made through videoconferencing, Balaci was charged with one count of dual-object conspiracy in the BitClub Network scam. This could attract a $250,000 fine and a maximum five-year sentence. 

In December 2019, four other men, namely, Russ Albert Medlin, Joseph Frank Abel, Jobadiah Sinclair Weeks, and Matthew Brent Goettsche, were found answerable for their involvement in the scheme. 

Medlin, who was the fraudulent network’s ringleader, and he initially managed to evade authorities until he was arrested in Indonesia on separate charges of child sex crimes mid last month. However, it was not clear whether he was extradited to face the crypto scam charges in the United States. 

Coercing investors

The BitClub Network was operational from April 2014 to December 2019, and investors were sweet-talked into investing in the scheme with the promise of getting shares of purported Bitcoin mining pools. Additionally, these investors were promised rewards for recruiting new members to the scheme.

According to the announcement, “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.” 

Balaci helped Medlin and Goettsche in establishing and operating the scheme as a programmer. For instance, he could manipulate the Bitcoin mining earning figures to the tune of 60% higher to dupe investors. 

Leaked FinCEN Files: $137M Linked to Crypto Ponzi Scam OneCoin Laundered Through Bank of New York Mellon

A leaked trove of US official documents revealed that five major banks – Deutsche Bank, HSBC, JP Morgan, Bank of New York Mellon, and Standard Chartered Bank – were involved in illicit transactions pertaining to mobsters, crypto Ponzi schemes, and money laundering.

The official Financial Crimes Enforcement Network (FinCEN) document was leaked and disclosed that more than two trillion USD had been laundered and flagged as suspicious by financial institutions following the Anti-Money Laundering (AML) act. However, the dirty money was still reported to have been freely flowing through renowned US banking institutions.

BNY Mellon wired millions linked to OneCoin

Among them, one of America’s oldest banks, the Bank of New York Mellon (BNY Mellon) was reported to have wired funds linked to the infamous crypto laundering Ponzi scheme OneCoin.

The banking institution flagged a series of transactions from their branch to FinCEN, as the transactions were deemed suspicious and layered. Layering refers to a money laundering ruse through which the source of funds is concealed through multiple transactions. It is often used by mobsters and criminals to remain undetected by the Financial Crimes Enforcement Network and other financial regulators.

$137 million in transactions wired through BNY Mellon

The funds pinpointed by BNY Mellon were linked to OneCoin, a crypto scam that made the headlines and was classified as a Ponzi scheme generating multimillion funds by US law enforcement agents. The crypto Ponzi scheme was masterminded by Ruja Ignatova, who disappeared to flee arrest.

OneCoin was operational in many countries, such as New Zealand and the US, to name a few, and generated at least $4 billion through cryptocurrency “pyramid schemes,” making it one of the most successful and biggest Ponzi scheme in cryptocurrency history.

According to the leaked report, a combined $137 million was wired thanks to numerous transactions operating through the Bank of New York Mellon. The source of the transactions was reported by the bank to originate from OneCoin perpetrators and agents.

Other banks that were named in the leaked FinCen files include Deutsche Bank, JP Morgan, Standard Chartered Bank, and HSBC.

Deutsche Bank

The Deutsche Bank is alleged to have played a role in moving money worth more than $560 million for a Latin American construction company. It is alleged by US prosecutors to have been subject to foreign bribery. FinCEN has recorded a combined total of $1.3 trillion of suspicious transactions flowing through Deutsche Bank, making it the lead bank of the pack for having the largest suspicious transaction volume.

JP Morgan

JP Morgan was said to have processed at least $514 billion of suspicious transactions. It was said to have been involved in a money-laundering operation involving former Trump campaign manager Paul Manafort, and Bernie Madoff. It is also alleged to have conducted business with a financial Malaysian fugitive and a Venezuelan criminal.

Standard Chartered Bank and HSBC

Standard Chartered Bank was said to have processed illicit transactions amounting to a combined $24 million for foreign mobsters.

Finally, HSBC is alleged to have been in cahoots with Russian mobsters, moving funds amounting to at least $4.5 billion in suspicious transactions. The bank is alleged to have continued its money laundering transactions and to have wired funds linked to a Ponzi Scheme. An HSBC Hong Kong executive has been accused of processing more than $900 million in transactions linked to criminal networks.

Statements from Deutsche Bank and other financial banks have said that the incidents that have come to light in the documents have already been investigated and resolved with Deutsche Bank’s complete cooperation.

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