UpdatesJan 17, 2023

The judgment in the Bitconnect case has been passed. Some investors will get their money back

The justice system helps injured members of the cryptocurrency community.

The US Department of Justice (DOJ) has announced a court ruling in the case of victims of fraud related to the Bitconnect investment program. Some of the affected investors will receive $17 million in restitution.

Judgment in the Bitconnect case

On January 12, the U.S. District Court for the Southern District of California ruled on a fraudulent scheme by the creators of a cryptocurrency investment platform called Bitconnect. According to a statement released by the Department of Justice (DOJ), a portion of the stolen funds has been ordered to be returned to approximately 800 people who have been affected by the fraud. Part of the funds will be sent to this group of investors, with a total value of USD 17 million.

The DOJ statement said Bitconnect was a cryptocurrency platform designed to advertise proprietary technology, including the "Bitconnect Trading Bot" protocol and "Volatility Software." As promised by the owners of the platform, they were to guarantee program participants interest returns on their investments.

Fraudsters declared to return an average daily compound interest rate of 1% or 3,700% per annum. As it turned out, the platform had been operating as a "textbook Ponzi scheme" from the beginning, the Department of Justice said.

The project launched in 2016, and two years later the platform was declared bankrupt after $2.4 billion worth of funds raised from over 4,000 people in 95 countries was stolen.

The official founder of Bitconnect - Satishi Kumbhani - was charged by the Department of Justice in February last year. He is also being investigated separately by the Indian authorities. His whereabouts, however, remain unknown to this day.

The key American promoter of Bitconnect - Glenn Arcaro - in September 2021 pleaded guilty to charges against him of participating in a conspiracy to defraud investors. The court ordered him to reimburse $24 million to victims of the scam.

According to the Department of Justice, Arcaro and his associates used about 15% of Bitconnect investors' funds for a slush fund that benefited its owner and other promoters.

On September 16, 2022, Arcaro was sentenced to 38 months in prison for participating in the fraudulent conspiracy that was Bitconnect.