The U.S. Department of Justice will sell $56 million in cryptocurrency to compensate victims of BitConnect, the "largest crypto fraud scheme in history"

The U.S. Department of Justice announced on Tuesday that a federal judge has approved it to sell $56 million worth of seized cryptocurrency to compensate victims of the BitConnect crypto Ponzi scheme.

BitConnect

The U.S. Department of Justice called the BitConnect scheme " the largest cryptocurrency fraud scheme ever ," defrauding investors of more than $2 billion. The liquidation is also the largest single recovery of cryptocurrency fraud in the U.S. to date.

Founded in 2016, BitConnect developed a digital token called BitConnect Coin that can be exchanged for Bitcoin. BitConnect claimed to investors that it could generate a 40% monthly return through its unique, but non-existent "volatility software trading robot", and the false returns obtained by investors showed an annual yield of up to 3,700%. The company was closed after receiving a cease and desist order from Texas regulators for violating securities laws. The SEC believes that the BitConnect loan program constitutes a fraudulent and unregistered securities offering, and that the BitConnect promoters have committed serious wire fraud and violated investor protection laws.

Glenn Arcaro

According to court documents, BitConnect's top promoter and founder Glenn Arcaro pleaded guilty to federal wire fraud in early September. He faces up to 20 years in prison and his final sentencing will be on January 7, 2022.

Bitpush previously reported that in May this year, the SEC filed a lawsuit against five other people related to BitConnect (Joshua Jeppesen, Trevon Brown, Craig Grant, Ryan Maasen and Michael Noble). These five initiators were all led by Arcaro. In August, the SEC sentenced Noble and Jeppesen to pay a fine of US$12 million.

The Department of Justice said in a statement that it will begin selling cryptocurrencies and holding the proceeds in U.S. dollars, and will use the funds to provide compensation to victims in accordance with the restitution order issued by the court at future sentencing. The Department of Justice encourages all potential victims of the BitConnect scheme to visit https://www.justice.gov/usao-sdca/us-v-glenn-arcaro-21cr02542-twr to learn about their claims rights and details. The U.S. Postal Inspection Service is assisting in the liquidation of cryptocurrency proceeds.

Author: Mary Liu