An admitted participant in the BitConnect scam has had $56 million worth of cryptocurrency seized by the US government, which intends to sell the coins and use the money to compensate victims. The Department of Justice claims that Glenn Arcaro, a Los Angeles resident who has called himself BitConnect’s “number one promoter,” willingly surrendered the largest amount of cryptocurrency ever recovered.
Investments totaling $2 billion were made in BitConnect after the SEC found that the company claimed to have an automated trading bot capable of producing high rates of return on cryptocurrency trading, according to the SEC. According to BitConnect’s pitch, anyone could invest in cryptocurrency and make a fortune doing so, even though many people were hearing about it but had little knowledge of it at the time (around 2016 through 2018).
In reality, the DOJ says BitConnect was a Ponzi scheme, and its advocates built pyramid schemes in which they would get a cut for convincing others to invest by promising them the same deal. When Arcaro pleaded guilty in September, he admitted to participating in both parts of the scam while allegedly posting videos on YouTube mocking BitConnect doubters. He claimed that he had earned $24 million as a result of his involvement.
One of BitConnect’s investors gave a memed presentation in which he repeatedly shouted “BitConneeeeect” and claimed that his wife had accused him of falling for a scam because he invested in the company.
The government plans to reimburse BitConnect victims in USD, despite the fact that BitConnect primarily traded in Bitcoin (victims would buy BitConnect’s own BCC tokens using Bitcoin and could ostensibly convert BCC back into Bitcoin through a convoluted process). The US Postal Service’s law enforcement division will assist in the conversion of crypto to fiat currency, according to a DOJ press release. Arcaro is scheduled to be sentenced in January 2022, and a government website has been set up for those who wish to seek compensation.