BitConnect victims to receive $17 million: DOJ

BitConnect victims will receive $17 million in restitution money, according to an announcement from the US Department of Justice (DOJ) on January 12.

That statement indicates that a federal court in San Diego, California, has ordered that these funds be delivered to 800 people in 40 countries.

BitConnect was widely recognized as a Ponzi scheme, both publicly and in legal proceedings. Its associates have been indicted and found guilty on various charges: BitConnect founder Satish Kumbhani was indicted in February 2022, while top US promoter Glenn Arcaro pleaded guilty in September 2021. Additionally, both were sued by the US Securities and Exchange Commission in September 2021.

BitConnect was in operation between 2016 and 2018. The value of the crypto token associated with the project collapsed shortly after the project shut down.

Several jurisdictions, including the UK, Texas, and North Carolina, took steps to restrict Bitconnect operations at an early date. However, the project’s distributed structure and lack of central leadership meant that some development around the project continued even after it was formally closed or targeted by regulators.

The nature of the situation also means that victims have had to wait years for compensation. In November 2021, the Department of Justice seized $56 million in cryptocurrency with the intent to sell it and compensate victims. That $56 million in crypto funds would now be worth roughly $17 million due to market fluctuations, though the Justice Department has not stated precisely when it sold the seized cryptocurrencies for cash.

In any event, the $17 million to be returned to victims represents only a portion of BitConnect’s value, as it was seized from Arcaro personally. BitConnect itself raised $2.4 billion from investors, according to a Justice Department statement in early 2022.

Posted In: US, Crime, Legal