Bitconnect

800 victims of ‘massive’ Bitconnect fraud to receive $17M restitution

The millions will be distributed among the select number of victims, but thousands more were impacted by the $2.4 billion fraudulent scheme.

A group of crypto fraud victims of the BitConnect investment scheme will see some respite from the multi-billion dollar fraud scheme after a court ordered they receive a share in a $17 million restitution.

The United States District Court for the Southern District of California ordered the restitution for the “massive” scheme on Jan. 12 according to a release on the same day by the Department of Justice (DOJ).

800 victims of the scheme, hailing from 40 countries will be able to take a small slice of the $17 million restitution, a term that refers to returning property or monetary value of losses to the proper owner.

The DOJ statement noted that Bitconnect was a purported crypto lending platform that touted proprietary technology including the “Bitconnect Trading Bot” and “Volatility Software” that claimed would net investors guaranteed returns.

It promised a return an average daily compounding interest of 1% or 3,700% annually.

Investors would trade in Bitcoin (BTC) receiving Bitconnect Coin (BCC) in return which could be lent out at varying rates of interest.

However, the whole platform turned out to be a “textbook Ponzi scheme,” as early investors were paid with funds supplied by new investors, it wrote.

The crypto platform launched in 2016 but collapsed in 2018 after pilfering $2.4 billion from over 4,000 people from 95 countries.

The alleged founder of Bitconnect, Satish Kumbhani, was charged by the DOJ in February 2022. He is also subject to a police investigation in India and his whereabouts are currently unknown.

*Kumbhani (right) in a 2017 interview. Image:* *YouTube*

The top U.S.-based Bitconnect promotor, Glenn Arcaro, pled guilty to wire fraud conspiracy charges in September 2021 and was ordered to pay back $24 million to investors.

According to the DOJ, Arcaro and others used 15% of Bitconnect investor money for a slush fund to be used for the benefit of its owner and other promoters.

On Sep. 16, 2022, Arcaro was sentenced to 38 months in prison for his participation in Bitconnect.

800 victims of ‘massive’ Bitconnect fraud to receive $17M restitution

The millions will be distributed among the select number of victims, but thousands more were impacted by the $2.4 billion fraudulent scheme.

The United States District Court for the Southern District of California ordered the restitution for the “massive” scheme on Jan. 12, according to a release on the same day by the Department of Justice (DOJ).

Around 800 victims of the scheme from 40 countries will be able to receive a small slice of the $17 million restitution, a term that refers to returning property or the monetary value of losses to the proper owner.

It promised a return an average daily compounding interest of 1% or 3,700% annually.

Investors would trade in Bitcoin (BTC) and receive Bitconnect Coin (BCC) in return, which could be lent out at varying rates of interest.

However, the whole platform turned out to be a “textbook Ponzi scheme,” with early investors paid in funds supplied by new investors, the DOJ wrote.

The crypto platform launched in 2016 but collapsed in 2018 after pilfering $2.4 billion from over 4,000 people from 95 countries.

The alleged founder of Bitconnect, Satish Kumbhani, was charged by the DOJ in February. He is also subject to a police investigation in India and his whereabouts are currently unknown.

The top U.S.-based Bitconnect promotor, Glenn Arcaro, pleaded guilty to wire fraud conspiracy charges in September 2021 and was ordered to pay back $24 million to investors.

According to the DOJ, Arcaro and others used 15% of Bitconnect investor money ona slush fund used to benefit its owner and other promoters.

On Sept. 16, 2022, Arcaro was sentenced to 38 months in prison for his participation in Bitconnect.

Indian police launch probe into BitConnect founder wanted by US SEC

The Indian police launched an investigation into BitConnect co-founder Satish Kumbhani months after the U.S. SEC said he had relocated from India.

The saga of BitConnect, a major cryptocurrency scam scheme, is taking another twist as one of the BitConnect co-founders is now wanted by the Indian state police.

Satish Kumbhani, an Indian national and the alleged founder of the crypto Ponzi scheme BitConnect, reportedly became subject to a new police investigation in India, The Indian Express reported on Wednesday.

The Pune police, operating under the Indian state Maharashtra Police, launched a probe into Kumbhani after a Pune-based lawyer filed a complaint claiming that he had lost about 220 Bitcoin (BTC), or $5.2 million, due to BitConnect. The complainant said his original investment was 54 BTC, with returns of 166 BTC, which he allegedly used to reinvest into platforms.

The claimant noted that transactions between him and the suspects took place between 2016 and June 2021, pointing to six more people allegedly involved in the scam alongside Kumbhani. No arrests have been made in the case, the report notes.

BitConnect is one of the biggest scam schemes in the history of crypto, with the Ponzi orchestrators reportedly fraudulently raising about $2.4 billion from misled investors. Launched in February 2016, BitConnect operated a platform and a digital currency, shutting down in January 2018, with founders eventually vanishing with investors’ money.

Despite BitConnect taking down operations years ago, the BitConnect case has been seeing a lot of action recently, with the Department of Justice charging Kumbhani for orchestrating the BitConnect scam scheme in February 2022.

The United States Securities and Exchange Commission (SEC) subsequently said the authority was unable to locate the missing BitConnect co-founder. In a court filing in late February, the SEC noted that Kumbhani’s last known location was in his native India.

BitConnect is not the only crypto scam whose main arrangers are currently missing. Global prosecutors and authorities are also investigating scams like OneCoin, a $4 billion Ponzi scheme that ceased operating in late 2019.

Ruja Ignatova, the Bulgarian-German creator of OneCoin, was added to the Ten Most Wanted list by the Federal Bureau of Investigation in June 2022. Ignatova, widely referred to as “Cryptoqueen” in the crypto community, was last seen in 2017.