Former Fed Employee Fined in Scheme to Earn Bitcoins

By Jeff Bater

A former Federal Reserve employee accused of installing unauthorized computer software to connect to a bitcoin network has been sentenced to 12 months’ probation and fined $5,000.

The inspector general of the Fed’s Board of Governors announced that Nicholas Berthaume pleaded guilty in October to one misdemeanor count of unlawful conversion of government property. Sentencing was Jan. 27.

Berthaume, a communications analyst, had access to certain Board servers, and he allegedly installed unauthorized software on a Board server to connect to an online bitcoin network in order to earn bitcoins, the inspector general, Mark Bialek, said in a statement Jan. 30.

No Sensitive Information Lost

A Fed spokesperson said in an e-mail to Bloomberg BNA that no sensitive information was lost and no Board systems were damaged. “The Board has comprehensive programs in place to protect sensitive data which all employees are required to follow,” the spokesperson said. “The Board’s security program is dynamic and our experiences from this incident have been incorporated into the program.”

Bitcoins are earned as compensation when users allow their systems’ computing power to be part of the structure that processes, verifies and records bitcoin transactions. Bialek said his office was unable to determine the amount of bitcoins earned through the Board’s server because of the anonymity of the Bitcoin network.

Berthaume modified security safeguards in order to remotely access the server from home, Bialek alleged. When confronted about the actions, Berthaume initially denied knowledge of the wrongdoing.

“Later, however, Berthaume remotely deleted the software that he had installed in an effort to conceal his actions,” Bialek said.

The Office of the Inspector General investigated the matter, and forensic analysis confirmed Berthaume’s involvement, which resulted in his firing and ultimately led to an admission of guilt, Bialek said.

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To contact the editor responsible for this story: Michael Ferullo at

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