Around 800 victims of the BitConnect scheme will soon receive a portion of $17 million in restitution after a court ruling ordered it so.
A court ruling on Thursday by the U.S. District Court for the Southern District of California ordered that the roughly 800 victims of the infamous BitConnect scheme are to receive a portion of $17 million in restitution. The court ruling described BitConnect as a crypto lending platform that touted proprietary technology including the “Bitconnect Trading Bot” and “Volatility Software” that claimed it would guarantee investors’ returns.
The Department of Justice issued a press release that stated:
In truth, however, BitConnect operated a textbook Ponzi scheme by paying earlier BitConnect investors with money from later investors.
The U.S.-based promoter for BitConnect, Glenn Arcaro, pleaded guilty to conspiracy to commit wire fraud in September 2021 and has been sentenced to 38 months in jail. The DOJ also announced that it would sell $56 million worth of crypto seized from Arcaro to compensate victims of the scheme.
The BitConnect Crypto Scheme
BitConnect launched in February 2016 and employed a multi-tier pyramid structure to reward its investors based on the number of affiliates they introduced into the program. The project reportedly promised a one percent average daily return, claiming that investors could turn a $1,000 investment into $36,000 in one year. Many industry heavyweights such as Ethereum founder Vitalik Buterin, repeatedly warned consumers against the dangers of BitConnect.
In October 2017, BitConnect’s native token, BCC, was ranked as the eighth most valuable token with a market cap of almost $2.6 billion. The project eventually collapsed in 2018 after regulators intervened and forced it to shut down. Following the fall of BitConnect, investors eventually got their BCC tokens back, but by that point, the token dropped from its all-time high of around $500 to less than $1.
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