BitConnect victims to be repaid with sale of seized cryptoswritten by Bella Palmer
The DOJ says that it’s the largest recovery of crypto currency to date, and that it was willingly given up by Glenn Arcaro, who has called himself BitConnect’s ‘number one promoter’
The US government has seized $56 million worth of crypto currency from an admitted participant in the BitConnect scam and intends to sell the coins and use the proceeds to reimburse victims.
The Department of Justice (DOJ) says that it’s the largest recovery of crypto currency to date, and that it was willingly given up by Los Angeles resident Glenn Arcaro, who has called himself BitConnect’s “number one promoter.”
According to the Securities and Exchange Commission (SEC), BitConnect convinced people to invest a total of $2 billion by telling them that it had a bot capable of generating incredibly high rates of return from crypto trading. In other words, BitConnect sold itself as a way for people to easily invest in crypto currency and to make a lot of money doing so, at a time when people were hearing a lot about crypto but didn’t know much about it around 2016 through 2018.
In reality, the DOJ says it was all a scam. BitConnect used money from new investors to pay old ones, and its advocates built pyramid schemes where they would get a cut for convincing others to invest by promising them the same deal. In September, Arcaro pleaded guilty to participating in both parts of the scam while allegedly posting videos online to make fun of BitConnect doubters. He said that he had earned what was then valued at $24 million by his participation.
The scheme promised investors an outstanding 40% return on investment every month, a clear indication of a scam. However, the space was still young enough and with the bull market starting in 2017, a good number of investors got caught up in the scheme.
What followed was a stretched-out lawsuit against founder Satish Kumbhani and accomplice Glenn Arcaro. Now with the case coming to an end, the Department of Justice is set to auction off some of the seized crypto currencies to reimburse those who were affected by the scam.
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