BitConnect’s “Textbook Ponzi” victims will be compensated with $17 million

Join Our Telegram channel to stay up to date on breaking news coverage

According to a decision made by a Californian court, about 800 victims of the infamous BitConnect scam will shortly receive a fraction of $17 million in damages.

According to the ruling issued on Thursday by the US District Court for the Southern District of California, BitConnect was a fictitious cryptocurrency lending platform that boasted its own proprietary technology, such as the “Bitconnect Trading Bot” and “Volatility Software,” which promised investors guaranteed returns.

In reality, though, the news statement from the U.S. Department of Justice states that BitConnect

executed a textbook Ponzi scheme by compensating earlier BitConnect investors with money from later investors.

The promoter of BitConnect located in the United States, Glenn Arcaro, pleaded guilty to conspiracy to conduct wire fraud in September 2021 and was given a 38-month prison term a year later.

Prior to that, the DOJ declared in November 2021 that it would sell $56 million worth of bitcoin that had been taken from Arcoro in order to make up for the victims of the scam.

The project’s founder Satish Kumbhani, who is currently at large, was later named in an indictment by the DOJ that was made public in February 2022. He was charged with defrauding investors out of about $2.4 billion through a Ponzi scheme.

Kumbhani is accused by the government of operating an unauthorized money transferring business, conspiring to commit international money laundering, manipulating commodity prices, and wire fraud.

Bitconnect’s cryptocurrency scam

BitConnect was introduced in February 2016 and used a multi-tier pyramid structure to pay investors according on how many affiliates they brought on board. By the end of 2017, BitcConnect’s own currency, BCC, had a market cap of about $2.6 billion and was ranked as the eighth most valuable coin in the world.

The idea implied that there was a chance to turn $1,000 into $36,000 in a year by promising average daily returns of 1%.

Numerous well-known individuals, such as Charlie Lee, the developer of Litecoin, Vitalik Buterin, Mike Novogratz, the CEO of Digital Galaxy, and others, have frequently cautioned about the risks associated with the project. Novogratz has referred to BitConnect as a “old school Ponzi.”

When authorities learned about the scheme in 2018, they forced BitConnect to shut down, which led to its demise. When investors eventually received their BCC tokens back, the price of the coin had dropped from its all-time high of almost $500 to less than $1.

In September 2021, about three years after the project’s termination, the U.S. Securities and Exchange Commission filed a separate lawsuit against BitConnect.

Read more

Join Our Telegram channel to stay up to date on breaking news coverage

Source: https://insidebitcoins.com/news/bitconnects-textbook-ponzi-victims-will-be-compensated-with-17-million