In Brief:
- DOJ will sell $56 million in seized cryptocurrency to pay Bitconnect fraud victims.
- The scam is claimed to have cost tens of thousands of consumers in the US more than $2 billion in bitcoin.
- The FBI and the IRS Criminal Investigation Division are both looking into the issue.
The US Department of Justice (DOJ) said on Tuesday that it will sell $56 million in seized cryptocurrency to pay Bitconnect fraud victims.
According to the Justice Department, “the BitConnect scheme is the largest cryptocurrency fraud scheme ever charged criminally.”
On Friday, United States District Judge Todd W. Robinson granted a request from the Department of Justice and the United States Attorney’s Office for the Southern District of California. He said “for authority to liquidate approximately $56 million in fraud proceeds seized from the self-described “number one promoter” of BitConnect, a cryptocurrency, who consented to the seizure.”
As per the Justice Department, “this liquidation is the largest single recovery of a cryptocurrency fraud by the United States to date.”
Glenn Arcaro, 44, of Los Angeles, pled guilty on Sept. 1 to participating in a vast conspiracy to defraud BitConnect investors in the United States and internationally.
When Arcaro is sentenced on Jan. 7, 2022, he faces a maximum penalty of 20 years in prison. A federal district court judge will impose any punishment after considering the US Sentencing Guidelines and other statutory factors.
According to court filings, in which investors were fraudulently enticed to invest over $2 billion. The BitConnect conspiracy is the largest cryptocurrency fraud scheme ever prosecuted in the United States.
The government will begin the process of making whole victims of the BitConnect fraud by selling the cryptocurrency and keeping the earnings in US dollars once the court’s interlocutory sale order is entered.
Also, the government will keep the confiscated funds in cryptocurrency wallets and will utilise them to pay compensation to the victims in accordance with a future restitution order issued by the court at sentencing.
In the meantime all prospective BitConnect victims are asked to go to the US Department of Justice for information on their rights as victims, to submit a victim impact statement, and to identify themselves as potential victims.
The case is being investigated by the FBI and the IRS Criminal Investigation Division. The US Postal Inspection Service is aiding with the bitcoin revenue liquidation.
This is not the first time someone going behind the bars for such a big fraudulent activity. Earlier, the inventor of cryptocurrency AriseCoin, Jared Rice Sr., pleaded guilty to cheating investors out of more than $4 million.
