Crypto

US Government Set to Auction $56 million Crypto Confiscated from Fraud Scheme

US Government Set to Auction 56 million Dollars Crypto Confiscated from Fraud Scheme

A U.S court has granted prosecutors’ request to expropriate $56 million in earnings seized from a US promoter of offshore company BitConnect, which reportedly orchestrated one of the largest cryptocurrency scams of all time. According to the Department Of Justice, the confiscation was the greatest single recovery from a bitcoin fraud in the United States to date.

United States District Judge Todd W. Robinson granted the request of the Justice Department and the United States Attorney’s Office for the Southern District of California to take the proceeds from Glenn Arcaro, a U.S. promoter of BitConnect’s cryptocurrency scheme.

BitConnect and its founder, Satish Kumbhani, was also prosecuted by the Securities and Exchange Commission in September, with charges doubling a billion-dollar fraud involving bitcoin acquired from investors all around the world. An offence for which Mr. Arcaro pled guilty in federal criminal court the following month for his role in defrauding the unsuspecting American investors.

BitConnect exchanged its digital assets for bitcoin in 2016, then went on to inform investors that it had developed an automated method that would profit from the bitcoin donations and such profits would be distributed to investors in the form of interest payments.

Meanwhile, according to the SEC, BitConnect did not utilize a program to trade bitcoin, rather, Mr. Kumbhani took part of the funds for himself and shared the rest with promoters who helped him acquire the funds.

Victims of the ruse are invited to fill out a victim impact statement. Potential BitConnect program victims are encouraged to learn about their rights, provide information about their victim identity, and submit a report on the program’s consequences on the Justice.gov website.

BitConnect presents itself as a massively profitable crypto investment platform built on a proprietary trading bot, however, this bot is no actual survival. It’s a massive Ponzi scheme that pays out to participants based on how many individuals have bought into the scheme. The BCC coin that arose from this network has risen to become one of the top 20 most valuable cryptocurrencies by market capitalization, with a market cap of over $400.

The government announced that it would begin the process of reparation for those who were defrauded by BitConnect by selling the cryptocurrency and keeping the earnings in US dollars. According to the Justice Department, Mr. Arcaro who is billed for judgement pronouncement on 7th January 2022, faces up to 20 years in prison.

Authorities In the crypto market, however, has advised investors to be cautious, saying with the growth of cryptocurrency comes increased exposure to fraudsters. Citing an example with the recently created Squid Game currency, which is dubbed after the popular Netflix series, which gained millions after speculators drove up the price of the meme coin. Noting that before the crypto project was shut down, the crooks had made away with the loot.

For the time being, the confiscated bitcoin, which represents the greatest recovery in a cryptocurrency-related fraud case in the United States, remains in the possession of the authorities.

The Author

Oladotun Olayemi

Dotun is a financial enthusiast who specializes in first-in-class financial content, including crypto, blockchain, market, and business, to educate and inform readers.