BitConnect Fraud Victims Receive Over $17M Restitution
Due to their investment losses in BitConnect, a huge cryptocurrency investment scheme that misled thousands of investors worldwide, almost 800 victims from over 40 different countries will get over $17 million in restitution, according to a federal district court in San Diego.
Glenn Arcaro, 44, the leading BitConnect promoter in the United States, entered a plea of guilty to conspiracy to commit wire fraud on September 16, 2021. Separately, on February 25, 2022, BitConnect’s founder, Satish Kumbhani, was charged with a major involvement in the enormous fraud.
Arcaro stated as part of his plea deal that he and others had planned to take advantage of investor interest in cryptocurrencies by misrepresenting BitConnect’s ICO and digital currency exchange as a profitable business. Investors were mislead about BitConnect’s “Lending Program” by Arcaro and his compatriots.
By leveraging investors’ money to trade on the volatile cryptocurrency exchange markets, Arcaro claimed that BitConnect’s allegedly exclusive technology, also known as the “BitConnect Trading Bot” and “Volatility Software,” could yield substantial profits and guaranteed returns.
In reality, BitConnect ran a classic Ponzi scam by using later investors’ funds to pay early BitConnect investors. Up to 15% of the funds invested in BitConnect were funneled by Arcaro and his accomplices into a slush fund where they could be used by the company’s promoters and owner.
The announcement was made by U.S. Attorney Randy Grossman for the Southern District of California, Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division, Special Agent in Charge Tyler Hatcher of the IRS Criminal Investigation (IRS-CI) Los Angeles Field Office, and Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division.
The matter was looked into by the IRS-CI Los Angeles Field Office and the FBI Cleveland Field Office. The U.S. Postal Inspection Service and the Office of International Affairs of the Justice Department were crucial partners in the investigation.
The case is being prosecuted by Trial Attorney Kevin Lowell of the Fraud Section of the Criminal Division, together with Assistant U.S. Attorneys Carl Brooker, Lisa Sanniti, Mark W. Pletcher, and Contract Attorney Mark McDonald for the Southern District of California.
An accusation is all that an indictment is. Until they are proven guilty beyond a reasonable doubt in court, all defendants are deemed innocent.
