Bobbitt, who was homeless in 2017, was in court earlier in the morning and also pleaded guilty to conspiracy to commit money laundering, according to the U.S. Attorney's Office.
Bobbitt and co-defendants Mark D'Amico and Katelyn McClure face charges in Burlington county, New Jersey.
Prosecutors told the Burlington County Courthouse in Mount Holly, New Jersey, that Bobbitt conspired with McClure and her then-boyfriend Mark D'Amico to make up the 2017 story which claimed she gave the homeless man cash for petrol after being stranded along a USA highway.
McClure (left) claimed homeless veteran Johnny Bobbitt (right) helped her when she ran out of gas.
Prosecutors say the feel-good tale that made global headlines in 2017 was predicated on a lie.
But the story wasn't true, authorities said, as McClure and Bobbitt pleaded guilty Wednesday to federal charges.
The initial goal was to raise $10,000, but the campaign went viral and raised $400,000 from 14,000 people in three weeks.
Investigators initially searched the Florence, New Jersey home of D'Amico and McClure last September after questions arose about what happened to the money they raised for Bobbitt.
The BBC reports the trio came up with the scheme after the couple became acquainted with Bobbitt during trips to a local casino.
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Their tale inspired thousands, but things began to unravel when Bobbitt accused McClure and D'Amico of stiffing him out of the money, causing an investigation to be launched.
At an earlier hearing county prosecutor Scott Coffina said: "The entire campaign was predicated on a lie".
In court Wednesday, a narrative emerged that pinned D'Amico as the mastermind of the scam.
Bobbitt could be sentenced to a maximum of 10 years in prison.
McClure's sentencing is scheduled for June 19.
Bobbitt, McClure and D'Amico garnered worldwide attention in 2017, when the couple launched the GoFundMe to help get Bobbitt off the streets of Philadelphia.
Bobbitt, McClure and D'Amico still face additional state charges of theft by deception and conspiracy to commit theft.
Bobbitt has a scheduled appearance Friday in Drug Court in Mount Holly.
GoFundMe said it refunded all the donations.