US Court Orders $17m Be Given to BitConnect Victims

Victims of a massive investment fraud scheme are set to receive their share of over $17m in restitution ordered by a US court.

Around 800 individuals residing in over 40 countries worldwide will benefit from the federal district court order issued in San Diego at the end of last week.

However, that is someway short of the 4000 estimated victims from 95 countries that were left out of pocket by the Ponzi scheme.

BitConnect was a fraudulent cryptocurrency scheme which tricked investors into putting their money into the firm on the promise of big returns.

Its “BitConnect Trading Bot” and “Volatility Software” technology were promoted as part of the BitConnect Lending Program – promising guaranteed returns by trading on the volatility of cryptocurrency exchange markets.  

In fact, this was all an invention, with the firm’s owners simply paying earlier investors using the funds invested by later ones. Some 15% of those funds were ear-marked for a slush fund used by BitConnect’s owner and promoters, according to the Department of Justice (DoJ).

However, the $17m figure mentioned in court last week is some way short of the $56m in restitution that the DoJ announced back in November 2021. That may reflect the crash in cryptocurrency prices in the meantime.

It is also a much smaller sum than the $2.4bn allegedly stolen by BitConnect from investors.

The firm’s top promoter, Glenn Arcaro, 44, pleaded guilty to conspiracy to commit wire fraud back in September 2021, after allegedly pocketing as much as $24m from the BitConnect slush fund.

However, his boss and the company’s founder, Satish Kumbhani, is still at large, having reportedly fled his native India. Kumbhani was indicted in the US in February 2022 for conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodity price manipulation, operation of an unlicensed money transmitting business, and conspiracy to commit international money laundering.

If found guilty, he faces a maximum of 70 years behind bars.

Editorial credit icon image: Piotr Swat / Shutterstock.com