DOJ abandons BitClub founder case despite $722M fraud claims

The U.S. Department of Justice has reportedly moved to dismiss its criminal case against the founder of BitClub Network despite allegations that the crypto mining scheme defrauded investors of $722 million.

According to a report by Bloomberg Law, citing two people familiar with the matter, the Office of the Deputy Attorney General directed federal prosecutors in New Jersey to dismiss the case against BitClub Network founder Matthew Goettsche with prejudice, a move that would permanently end the prosecution if approved by the court.

A filing submitted to U.S. District Judge Claire Cecchi on Wednesday showed Goettsche’s legal team informed the court that both sides had reached “an agreement in principle” to resolve the case but required additional time to finalize its terms. The filing did not disclose the details of the proposed agreement.

If the dismissal proceeds, it would reverse one of the Justice Department’s highest-profile cryptocurrency fraud prosecutions after Goettsche spent years facing charges linked to the alleged operation of BitClub Network between 2014 and 2019.

Case has changed under the DOJ’s crypto policy

Federal prosecutors indicted Goettsche in December 2019 on charges including conspiracy to commit wire fraud and selling unregistered securities. His trial had been scheduled for October this year.

Court records allege BitClub Network marketed itself as a Bitcoin mining pool that allowed investors to purchase mining shares in exchange for passive income. Prosecutors claimed the company manipulated reported mining returns and fabricated earnings data to persuade existing members to invest more while attracting new participants.

Earlier court filings also alleged that Goettsche privately described the business model as being built “on the backs of idiots,” a statement prosecutors cited as evidence of the scheme’s intent.

The reported decision follows an April 2025 memorandum issued by Deputy Attorney General Todd Blanche, which instructed Justice Department prosecutors to end what he described as “regulation by prosecution” in cases involving the digital asset industry. Bloomberg Law reported that the directive formed part of the background to the department’s latest decision.

Three former BitClub executives have already admitted their roles in the operation. Silviu Balaci, Joseph Abel, and Gordon Beckstead each pleaded guilty in connection with the alleged fraud, making the reported dismissal of Goettsche’s case a notable departure from the prosecution’s earlier course.

Prosecutors continue pursuing large crypto fraud cases

While the BitClub case appears headed toward dismissal, the Justice Department has continued bringing criminal cases involving alleged cryptocurrency fraud and financial crime.

In February, federal authorities arrested Christopher Alexander Delgado, founder and chief executive of Goliath Ventures, on charges connected to an alleged $328 million Ponzi scheme, according to the Department of Justice. Prosecutors allege Delgado raised more than $300 million by promoting cryptocurrency liquidity pools that promised consistent monthly returns, while only about $1 million was invested in legitimate crypto assets. Investigators further allege that most of the funds were used to repay earlier investors and finance personal expenses, including luxury travel, corporate events, and multimillion-dollar homes in central Florida.

Separately, the Department of Justice announced in April that California resident Evan Tageman received a 70-month prison sentence for participating in a criminal enterprise that stole roughly $263 million in cryptocurrency through social engineering attacks and burglaries.

During the same month, the department also announced the freezing of more than $700 million in crypto linked to investment scams targeting U.S. victims, while authorities in February seized nearly $580 million connected to an alleged scam network operating across Southeast Asia.

Outside the crypto sector, federal prosecutors have also continued pursuing major financial crime cases. Last December, the U.S. Attorney’s Office for the Southern District of New York announced the conviction of filmmaker Carl Erik Rinsch on wire fraud, money laundering, and related financial charges after prosecutors alleged he diverted funds provided by Netflix for a science-fiction television series instead of using them for production.