Victims of Bitconnect to Receive $17 Million in Restitution

Earlier this week, a federal district court in San Diego ordered more than $17 million dollars in restitution to be distributed amongst the victims of the infamous Bitconnect investment scheme.

Approximately 800 victims from more than 40 countries around the world will be awarded compensation for their losses in the most significant single recovery of cryptocurrency for victims to date.

The Bitconnect Pyramid

Believed to be the largest cryptocurrency fraud ever criminally charged, the Bitconnect Ponzi scheme defrauded thousands of investors out of $3.4 billion dollars in total. The platform’s director and promoter, Glenn Arcaro pleaded guilty to conspiracy to commit wire fraud on Sept 16th 2021. As a part of his plea deal, he admitted the intent to exploit their investor's interest in cryptocurrency by fraudulently marketing Bitconnect’s initial coin offering (ICO) and digital currency exchange as a lucrative investment with guaranteed returns through the use of social media.

Special Agent in Charge Ryan L. Korner of the IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office explained the pyramid scheme in a statement to the media:

“Arcaro capitalized on the emergence of cryptocurrency markets, enticing innocent investors worldwide to get in early by promising them guaranteed returns, and exploiting the internet and social media to reach a larger pool of victims with greater ease and speed.”

“To conceal and further their scheme, Arcaro and his accomplices circumvented reporting regulations by the SEC and FinCEN, U.S. agencies that were created to protect investors and safeguard our financial systems. IRS-CI will pursue and root out these scams to protect investors and bring these financial fraudsters to justice.”

Acting U.S. Attorney Randy S. Grossman of the Southern District of California added:

“Arcaro and his confidantes preyed on investor interest in cryptocurrency. As a result, a staggering number of individuals lost an enormous amount of money. The Department of Justice will continue to protect the investing public and scrutinize the burgeoning cryptocurrency industry.”

“To those who would be the next in line to defraud the investing public, let this action by the Department of Justice stand as a stark cautionary tale. To the investing public, let this also serve as a cautionary tale to safeguard your money and invest it wisely.”

The crypto pyramid’s founder, Indian national Satish Kumbhani, was also indicted on Feb. 25 2022, for his key role in organizing the multi-billion dollar scheme and, if convicted in the U.S, would face a maximum sentence of 70 years in prison

Compensating the Victims

In November of 2021, the U.S. Marshals Service began making the victims whole by liquidating the cryptocurrency coins in Arcaro’s possession. These proceeds included approximately $57 million dollars worth of Bitcoin, Ethereum, Litecoin, Dash and several other digital currencies.

These coins were later sold by our Chief Recovery Officer, Joanna Summers, in her previous role with the U.S Marshals Service:

“I sold the cryptocurrency in this case last year through the OTC desk at Coinbase. One of the most rewarding parts of asset forfeiture is knowing your efforts resulted in victims being compensated for their losses.”

“The Arcaro case highlights the possibilities of crypto asset recovery and what a positive impact that can have on a victim's case. Victims can and do get their money back at times. Sadly, it’s not often enough, especially in the world of crypto but that’s what we are working towards enabling at Asset Reality.”

If you would like to know more about our work in crypto-related frauds and asset recovery, contact connect@assetreality.com

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