According to the US Department of Justice, BitConnect ran a“textbook Ponzi scheme.”
BitConnect Ponzi scheme victims may, at last, get some solace. Due to their investment losses in BitConnect, which misled hundreds of investors worldwide, the United States District Court for the Southern District of California ordered that more than $17 million in reparations be awarded to almost 800 victims from over 40 different nations.
According to the US Department of Justice’s (DOJ) official press release:
“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.”
Organiser Of The BitConnect Scam Is Satish Kumbhani
BitConnect, which was introduced in 2016, had a high market valuation of $3.4 billion. But, once the UK government published a notice to confirm its authenticity, it began to fall apart a year later. The Texas State Securities Board allegedly issued a stop-and-desist order to BitConnect in January 2018 on the grounds that the business ran a Ponzi scheme.
According to earlier reports, Satish Kumbhani, the company’s founder, was charged with defrauding investors of $2.4 billion in February 2022. The Justice Department charged him with conspiracy to commit wire fraud, wire fraud, conspiracy to manipulate commodity prices, running an unregistered money transmission business, and conspiracy to launder money abroad.
The location of Kumbhani is still unknown.
Glenn Arcaro Saying
On September 16, 2021, Glenn Arcaro, the leading US-based advocate of BitConnect, entered a plea of guilty to conspiracy to commit wire fraud. He acknowledged collaborating with other executives to promote BitConnect’s ICO and exchange as a profitable investment vehicle to capitalize on users’ interest in crypto assets.
Arcaro and his accomplices were accused by the DOJ of misleading investors about the platform’s “Lending Program.” Also, he claimed that by trading on the turbulence of the cryptocurrency exchange markets, BiConnect’s “BitConnect Trading Bot” and “Volatility Software” could earn large gains.
In contrast, the US Securities and Exchange Commission (SEC) discovered through a parallel investigation that the exchange’s operators utilized investor funds for their own gain and transferred them to the founders’ personal digital wallets. Arcaro received a prison term of over 3 years last year.