Crypto Scam Victims Receive Over $17 Million in Compensation from BitConnect Scheme | OPA
A federal district court in San Diego today ordered over $17 million in restitution to be distributed to approximately 800 victims from over 40 different countries due to their investment losses in BitConnect, a massive cryptocurrency investment scheme that defrauded thousands of investors worldwide.
On September 16, 2021, Glenn Arcaro (44), the top US-based promoter of BitConnect, pleaded guilty to conspiracy to commit fraud. Separately, on February 25, 2022, BitConnect founder Satish Kumbhani was indicted for his central role in the multi-billion dollar fraud.
As part of Arcaro’s plea, he admitted to conspiring with others to exploit investor interest in cryptocurrency by fraudulently marketing BitConnect’s initial coin offering and digital currency exchange as a lucrative investment. Arcaro and co-conspirators misled investors about BitConnect’s “lending program.” Under this program, Arcaro touted BitConnect’s alleged proprietary technology, known as “BitConnect Trading Bot” and “Volatility Software,” as being able to generate significant profits and guaranteed returns by using investors’ money to trade on the volatility of the cryptocurrency exchange markets.
In truth, however, BitConnect ran a textbook Ponzi scheme by paying earlier BitConnect investors with money from later investors. Arcaro and his co-conspirators arranged for up to 15% of the money invested in BitConnect to go directly into a slush fund to be used for the benefit of the owner and promoters.
Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Randy Grossman for the Southern District of California, Assistant Director Luis Quesada of the FBI’s Criminal Investigation Division, and Special Agent Tyler Hatcher of the IRS Criminal Investigation (IRS-CI) Los Angeles Field Office made the announcement.
The FBI Cleveland Field Office and the IRS-CI Los Angeles Field Office investigated the case. The Department of Justice’s Office of International Affairs and the US Postal Inspection Service provided indispensable assistance to the investigation.
Trial Attorney Kevin Lowell of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Carl Brooker, Lisa Sanniti and Mark W. Pletcher and Contracts Attorney Mark McDonald for the Southern District of California are prosecuting the case.
An indictment is only an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
