Victims of the BitConnect investment fraud are set to receive a portion of the $17 million restitution. About 800 victims from 40 countries will get a small slice of the $17 million restitution. The US District Court for the Southern District of California, on January 12, ordered the relief.
BitConnect, as per the Department of Justice, a purported crypto lending platform claimed it would net investors guaranteed returns through its touted proprietary technology, including the “Bitconnect Trading Bot” and “Volatility Softwar”. The company promised a return of an average daily compounding interest of 1% or 3,700% annually. For this, investors had to trade in Bitcoin and in return receive Bitconnect Coin (BCC). The token could be lent out at varying rates of interest.
But the platform turned out to be a textbook Ponzi scheme. The DOJ said early investors paid in funds supplied by new investors. Bitconnect, which was launched in 2016, collapsed in 2018. It had collected $2.4 billion from over 4,000 people from 95 countries. Satish Kumbhani, the alleged founder of Bitconnec, was charged in February and subjected to a police investigation in India. However, his whereabouts are unknown.
Glenn Arcaro, Bitconnect’s US-based promoter, pleaded guilty to wire fraud conspiracy charges in September 2021. He was ordered to pay $24 million to investors. It is alleged that Arcaro and other executives used 15% of Bitconnect investor money on a slush fund used to benefit the company’s owner and promoters.