Bitconnect Victims to Receive Over $17 Million in Restitution From Ponzi Scheme – The U.S. Department of Justice announced that around 800 victims from over 40 countries, who lost money to the crypto investment scheme Bitconnect, will have $17 million in restitution returned to them. The court order was issued by a federal district court in San Diego. Bitconnect had defrauded thousands of global investors.
The ruling comes as a result of the guilty plea of Glenn Arcaro, the top U.S. promoter of Bitconnect, who admitted to conspiring to commit wire fraud on September 16, 2021. Arcaro, 44, acknowledged that he marketed Bitconnect’s initial coin offering and digital currency exchange as a profitable investment opportunity with the intention of taking advantage of investors’ interest in cryptocurrency.
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Arcaro and his co-conspirators misled investors about Bitconnect’s “Lending Program” and its purported proprietary “Bitconnect Trading Bot” and “Volatility Software” technologies which, as they claimed, could generate guaranteed returns on investors’ money used to trade on crypto exchange markets.
“In truth, however, Bitconnect operated a textbook Ponzi scheme by paying earlier Bitconnect investors with money from later investors. Arcaro and his co-conspirators ensured that up to 15% of the money invested into Bitconnect went directly into a slush fund to be used for the benefit of its owner and promoters,” the DOJ explained.
Glenn Arcaro, a resident of Los Angeles, was sentenced to 38 months in U.S. federal prison in September of 2022. Arcaro had confessed to making at least $24 million from the scam. The DOJ had previously stated that all of the money would be repaid to investors or forfeited to the government. In November of the previous year, the Justice Department had auctioned off $56 million worth of crypto assets that were seized from Bitconnect.
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Satish Kumbhani, an Indian national and the founder of a cryptocurrency pyramid scheme, was charged on February 25, 2022 for his involvement in organizing a $3.4 billion fraud. Indian police began investigating Bitconnect and searching for Kumbhani in August. If found guilty in the United States, Kumbhani could be sentenced to up to 70 years in prison.
