US law enforcement will begin liquidating approximately $57 million worth of cryptocurrency seized from the now-defunct crypto exchange BitConnect to provide some compensation to defrauded investors.
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The amount pales in comparison to the $2 billion that BitConnect administrators stole from American and foreign investors during its two years of operation.
However, this liquidation is being considered by the US Department of Justice as “the largest single cryptocurrency recovery for victims to date” and the first step in the process of helping BitConnect victims recover some of their losses.
The rise and fall of BitConnect
BitConnect launched in 2016 as an open-source cryptocurrency exchange with its own token, the BitConnect Coin (BCC).
The platform, which features a high-yield investment program (up to 1% per day), quickly became popular, with token reaching the "top 20" in value by the summer of 2017.
Soon, clouds gathered over BitConnect as regulators suspected it was a Ponzi scheme, a suspicion that was repeatedly denied by the platform.
Ultimately, after multiple investigations, the platform was shut down in January 2018, the price of BCC collapsed, and a restraining order was issued to freeze all of its assets.
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During the investigations that followed, it was discovered that one of the high-ranking executives was actively involved in money laundering and was also involved in a second scam called "Regal Coin".
The founder, Glen Arcaro, pleaded guilty to criminal charges brought by the U.S. Department of Justice on September 1, 2021.
Arcaro admitted to misleading investors about BitConnect's supposedly proprietary technology that guaranteed a return on investment.
The man faces up to twenty years in prison and fines of $250,000 or twice the gross profit. Arcaro's sentence will be announced on January 7, 2022.
Victims of the BitConnect scam can complete this victim impact statement form to identify themselves as potential victims.
Additionally, victims can voluntarily submit their information to the FBI to assist law enforcement in their investigation.
Information source: bleepingcomputer.com
