800 victims of 'massive' Bitconnect fraud to receive $17M restitution

Published at: Jan. 13, 2023

A group of crypto fraud victims of the BitConnect investment scheme will see some respite from the multi-billion dollar fraud scheme after a court ordered they receive a share in a $17 million restitution.

The United States District Court for the Southern District of California ordered the restitution for the “massive” scheme on Jan. 12 according to a release on the same day by the Department of Justice (DOJ).

800 victims of the scheme, hailing from 40 countries will be able to take a small slice of the $17 million restitution, a term that refers to returning property or monetary value of losses to the proper owner.

The DOJ statement noted that Bitconnect was a purported crypto lending platform that touted proprietary technology including the “Bitconnect Trading Bot” and “Volatility Software” that claimed would net investors guaranteed returns.

It promised a return an average daily compounding interest of 1% or 3,700% annually.

Investors would trade in Bitcoin (BTC) receiving Bitconnect Coin (BCC) in return which could be lent out at varying rates of interest.

However, the whole platform turned out to be a "textbook Ponzi scheme," as early investors were paid with funds supplied by new investors, it wrote.

The crypto platform launched in 2016 but collapsed in 2018 after pilfering $2.4 billion from over 4,000 people from 95 countries.

Related: How to tell if a cryptocurrency project is a Ponzi scheme

The alleged founder of Bitconnect, Satish Kumbhani, was charged by the DOJ in February 2022. He is also subject to a police investigation in India and his whereabouts are currently unknown.

The top U.S.-based Bitconnect promotor, Glenn Arcaro, pled guilty to wire fraud conspiracy charges in September 2021 and was ordered to pay back $24 million to investors.

According to the DOJ, Arcaro and others used 15% of Bitconnect investor money for a slush fund to be used for the benefit of its owner and other promoters.

On Sep. 16, 2022, Arcaro was sentenced to 38­ months in prison for his participation in Bitconnect.

Tags
Regulation
United States
Department Of Justice
Fraud
Ponzi Scheme
Bitconnect
Related Posts
US Justice Dept is selling $56M in crypto to compensate victims of BitConnect’s fraud
The United States Department of Justice is planning to sell $56 million worth of cryptocurrency seized in connection with its case against Ponzi scheme BitConnect. In a Nov. 16 announcement, the Justice Department said it would sell the seized crypto and hold the proceeds in U.S. dollars until it could use the funds to provide restitution to BitConnect victims. The U.S. government is currently holding the $56 million in crypto in wallets, and said the amount of compensation to those affected by BitConnect’s fraud would depend on a “future restitution order by the court at sentencing.” “This liquidation is the …
Bitcoin / Nov. 16, 2021
DOJ indicts BitConnect’s Indian founder for $2.4B crypto Ponzi scheme
The founder of the infamous crypto exchange BitConnect, Satish Kumbhani, has been charged for allegedly misleading investors globally and defrauding them of $2.4 billion in the process. According to the Department of Justice (DOJ), a San Diego-based federal grand jury specifically charged Kumbhani for orchestrating the alleged Ponzi scheme via BitConnect’s “Lending Program”: “BitConnect operated as a Ponzi scheme by paying earlier BitConnect investors with money from later investors. In total, Kumbhani and his co-conspirators obtained approximately $2.4 billion from investors.” Back in 2017 amid the hype, BitConnect (BCC) recorded an all-time high of $463.31 in trading price, which according …
Blockchain / Feb. 26, 2022
Top Australian BitConnect promoter banned by ASIC for 7 years
The Australian Securities and Investments Commission (ASIC) has banned John Louis Anthony Bigatton, the former ‘Australian National Representative’ of the multi-billion-dollar crypto Ponzi scheme BitConnect, from providing financial services for seven years. ASIC asserts that the New South Wales resident provided unlicensed financial product advice and engaged in misleading and deceptive conduct while working for BitConnect from August 2017 through January 2018. While an investigation is still ongoing, the regulator has found that: “Mr. Bigatton is not a fit and proper person to provide financial services: is not adequately trained, or is not competent, to provide a financial service or …
Regulation / Sept. 3, 2020
Exec who bamboozled clients with crypto jargon pleads guilty to $3.25M fraud
The U.S. Department of Justice (DoJ) announced that the principal of crypto asset escrow company Volantis Market Making has pled guilty to commodities fraud worth more than $3.25 million on October 1. Volantis executive, 49-year-old Jon Barry Thompson, made false representations to a company from which he solicited $3.25 million to make purportedly “no risk” Bitcoin (BTC) purchases through a third firm during June and July of 2018. Despite Thompson asserting he would not part with the money until after the third firm had delivered the BTC, Acting Manhattan U.S. Attorney, Audrey Strauss, found that: “Thompson sent the money to …
Regulation / Oct. 2, 2020
SEC unable to locate BitConnect founder convicted in $2.4B fraud case
Indicted by the United States Department of Justice in a $2.4 billion Ponzi scheme, BitConnect founder Satish Kumbhani remains untraced following conviction. In a court filing on Monday, the Securities and Exchange Commission said that the whereabouts of Kumbhani remains unknown. The SEC noted that Kumbhani’s last known location was in his native country India, but has remained untraced ever since the promoter for his BitConnect Ponzi scheme was charged by the SEC for defrauding American investors of over $2 billion. SEC in its filing noted that the convicted founder has most probably fled to a foreign country and “Kumbhani’s …
Regulation / March 1, 2022