The United States Department of Justice (DOJ) released a Press Release on January 12th, 2023. According to the PR, “a federal district court in San Diego ordered that over $17 million in restitution be distributed to approximately 800 victims from over 40 different countries due to their investment losses in BitConnect, a massive cryptocurrency investment scheme, which defrauded thousands of investors worldwide.”
However, on September 16th, 2021, Glenn Arcaro, the top US-based BitConnect promoter, pleaded guilty to conspiracy to commit wire fraud. And on February 25, 2022, BitConnect Founder, Satish Kumbhani, was indicted for his central role in the multibillion-dollar fraud.
Furthermore, as part of his plea, Arcaro admitted to conspiring with others to exploit investor interest in cryptocurrency by fraudulently marketing BitConnect’s initial coin offering and digital currency exchange as a lucrative investment.
With his co-conspirators, he misled investors about BitConnect’s “Lending Program.” Under this program, Arcaro touted BitConnect’s purported proprietary technology, known as the “BitConnect Trading Bot” and “Volatility Software,” as being able to generate substantial profits and guaranteed returns by using investors’ money to trade on the volatility of cryptocurrency exchange markets, according to DOJ.
Notably, 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.
BitConnect operated a textbook Ponzi scheme by paying earlier BitConnect investors with money from later investors.
BitConnect: A Ponzi Scheme
BitConnect, a crypto platform launched in 2016 with the goal of allowing users to lend the value of BitConnect Coin (BCC) in return for interest payments. On November 7th, 2017, the government of the United Kingdom issued BitConnect a notice with two months to prove its legitimacy. Then, on January 3rd,…
