The US government intends to sell cryptocurrency obtained in the BitConnect case in 2018. The scam, which took place over the course of a year, was the largest ever in the crypto world, with over $2 billion lost by victims both at home and overseas. It was one of the most well-known cryptocurrency Ponzi schemes that operated from January 2017 until January 2018.
The plan promised investors a fantastic 40 percent return on investment every month, a clear indication that it was a hoax. However, the industry was still immature, and with the bull market beginning in 2017, a large number of investors became entangled in the scam.
A lengthy case was filed against creator Satish Kumbhani and accomplice Glenn Arcaro. Now that the case has concluded, the Department of Justice intends to auction off some of the seized cryptocurrency in order to compensate those who were harmed by the hoax.
The US Department of Justice issued a statement on Tuesday outlining its strategy for reimbursing victims of the fraud. The agency had first lodged a grant with the US Attorney’s Office for the Southern District of California, requesting power to liquidate about $56 million in cryptocurrency confiscated in connection with the case.
US District Judge Todd W. Robinson granted the request, putting the plan to sell and compensate the victims in action. This is the most outstanding single crypto seizure recovered by the US from fraud, and it was seized from Glenn Arcaro.
“With the entry of the court’s interlocutory sale order, the government will begin the process of seeking to make whole victims of the BitConnect fraud by selling the cryptocurrency and keeping the proceeds in US dollars,” according to the statement.
The DOJ has asked BitConnect victims to submit their compensation claims at https://www.justice.gov/usao-sdca/us-v-glenn-arcaro-21cr02542-twr.
Investors were promised that their monies would be utilized to trade with the “BitConnect Trading Bot” as part of the BitConnect scam. However, the funds had been siphoned for personal use by founder Kumbhani and his associates. Over $2 billion in funds were moved to the wallet addresses of Kumbhani, Arcaro, other promoters, and unknown individuals.
The $56 million in cryptocurrency being sold had been seized from Arcaro, who was known as the Ponzi scheme’s number one marketer. The Department of Justice had confiscated and taken custody of the cryptocurrencies with the defendant’s consent.
The case against Arcaro is nearing its conclusion. He is scheduled to be sentenced on January 7th and faces a maximum term of 20 years in prison for his role in the crime. In a separate action brought by the SEC in May, five other promoters were identified.
