BitConnect Victims Get Restitution Totaling Over $17 Million
A federal district judge in San Diego ordered the payout of over $17 million on Thursday, ending the waiting period for restitution for some of the victims of the cryptocurrency Ponzi scheme BitConnect. This sum, which will be divided among 800 Bitconnect victims in more than 40 countries, barely makes up a small portion of the entire BitConnect victim population—2.4 billion people were duped out of their money by the scheme.
According to the Department of Justice, BitConnect’s marketers falsely advertised their digital currency exchange and initial coin offering (ICO) as a profitable venture. Claims of BitConnect’s patented “Volatility Software” and “BitConnect Trading Bot” were used to deceive investors, who were promised returns of 1% daily compound interest for a 3,700% yearly return. Later, it was determined that the scam was functioning as a typical Ponzi scheme, using funds from more recent investors to pay out investors, and that 15% of new deposits were placed into a “slush fund” for the benefit of the programme’s promoters and creators.
The guilty plea for conspiracy to commit wire fraud by BitConnect’s US-based promoter Glenn Arcaro is accompanied by a court judgement for restitution. He was given a 38-month prison sentence and mandated to reimburse BitConnect victims $24 million in October. Furthermore, BitConnect’s founder Satish Kumbhani was charged by US prosecutors last year for his part in the vast fraud, although it is still unclear where he is.
In exchange for their losses, victims of the fraudulent cryptocurrency platform will get compensation for the misleading promotion of the BitConnect Trading Bot & Volatility Software, which included a guarantee of 1% daily compound interest. Do Kwon’s restitution proposal, which details an ambitious schedule for the allocation of cash, was recently adopted by 65% of the victims following months of negotiations with the US Department of Justice.