US law enforcement authorities will begin liquidating around $57 million in cryptocurrency confiscated from the now-defunct BitConnect crypto exchange.
The amount is insignificant in comparison to the $2 billion that BitConnect executives defrauded from American and foreign investors over the course of the company's two years of presence.
Nonetheless, the US Department of Justice considers this liquidation to be "the largest single recovery of cryptocurrency for victims to date" and the first step in assisting BitConnect victims regain some of their losses.
BitConnect, an open-source cryptocurrency exchange with its own token, the BitConnect Coin, was founded in 2016. (BCC).
The platform, which offers a high-yield investment programme (up to 1% per day), swiftly gained traction, with the token's value hitting the 'top 20' by the summer of 2017.
Soon, clouds gathered above BitConnect as regulators accused it of being a Ponzi scheme, a charge the company frequently denied. After several probes, the platform was eventually shut down in January 2018, BCC's price collapsed, and a restraining order was filed to freeze all of the company's assets.
During the subsequent investigations, it was found that one of the top executives was actively involved in money laundering as well as a second fraud known as 'Regal Coin.'
On September 1, 2021, the company's founder, Glen Arcaro, pleaded guilty to the criminal allegations brought by the US Department of Justice.
Arcaro agreed that he deceived investors about BitConnect's allegedly patented technology, which promised investors a profit. Early BitConnect investors were compensated with money from later BitConnect investors, as he admitted, a classic Ponzi scheme example (SEC complaint).
Acting U.S. Attorney Randy S. Grossman of the Southern District of California stated, "Arcaro and his confidantes preyed on investor interest in cryptocurrency. As a result, a staggering number of individuals lost an enormous amount of money. To the investing public, let this also serve as a cautionary tale to safeguard your money and invest it wisely."
The offender now faces up to twenty years in jail, $250,000 in penalties, forfeiture, and restitution, or double the gross gain or loss from the offence. Arcaro's sentence will be heard on January 7, 2022.
Victims of the BitConnect scam can identify themselves as possible victims by filling out this victim impact statement form. Victims can also willingly provide their information to the FBI to help with the investigation.
It's suggested to keep an eye out for counterfeit wallet software, spoofed websites, and multiplier frauds while investing in cryptocurrency. Even if people find a platform that looks to be reliable, it’s recommended to not put all the money in one place.
Rather, diversify the cryptocurrency and investment portfolio to reduce the danger of losing everything all at once.
