Sunday, November 28, 2021

BitConnect: U.S. to use $56 million in seized crypto to compensate fraud victims

The BitConnect scheme is the largest cryptocurrency fraud scheme ever charged criminally.

• November 16, 2021
Cryptocurrencies used to illustrate the story [Photo credit: VOI]

$56 Million in Seized Cryptocurrency Being Sold as First Step to Compensate Victims of BitConnect Fraud Scheme

On Friday, U.S. District Judge Todd W. Robinson granted a request from the U.S. Department of Justice and the U.S. Attorney’s Office for the Southern District of California 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. This liquidation is the largest single recovery of a cryptocurrency fraud by the United States to date. 

According to court documents, on Sept. 1, Glenn Arcaro, 44, of Los Angeles, pleaded guilty to participating in a massive conspiracy to defraud BitConnect investors in the United States and abroad, in which investors were fraudulently induced to invest over $2 billion. The BitConnect scheme is the largest cryptocurrency fraud scheme ever charged criminally.

With entry of the court’s interlocutory sale order, the government will begin the process of seeking to make whole victims of the BitConnect scheme by selling the cryptocurrency and holding the proceeds in U.S. dollars. The government will maintain custody of the seized proceeds in cryptocurrency wallets and intends to use these funds to provide restitution to the victims pursuant to a future restitution order by the court at sentencing. 

All potential victims of the BitConnect scheme are encouraged to visit for information on rights they may possess as a victim, the opportunity to submit a victim impact statement, and to identify themselves as a potential victim.

Arcaro is scheduled to be sentenced on Jan. 7, 2022, and faces a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI and IRS-Criminal Investigation are investigating the case. The U.S. Postal Inspection Service is assisting with the liquidation of the cryptocurrency proceeds.

Trial Attorney Kevin Lowell of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Daniel Silva, Mark W. Pletcher, Carl Brooker, and Lisa Sanniti of the Southern District of California are prosecuting the case. The Department of Justice’s Office of International Affairs provided indispensable assistance to the investigation. 

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