We’ve talked about Cryptocurrency recently, and discussed how it can be a favorite of scammers.
Now, a federal district court in San Diego has ordered the promoters of BitConnect, a massive cryptocurrency investment scheme, which defrauded thousands of people, to pay over $17 million in restitution, to be distributed to approximately 800 victims from over 40 different countries.
Glen Araco, the top U.S.-based promoter for BitConnect, pleaded guilty to conspiracy to commit wire fraud. Separately, BitConnect founder, Satish Kumbhani, was indicted for his central role in the multibillion-dollar fraud.
As part of Arcaro’s plea, he admitted to conspiring with others to fraudulently market BitConnect’s initial coin offering and digital currency exchange as a lucrative investment. Arcaro and co-conspirators misled investors about BitConnect’s “Lending Program.” Under this program, Arcaro touted BitConnect’s purported proprietary technology, known as the “BitConnect Trading Bot” and “Volatility Software,” as being able to generate substantial profits and guaranteed returns by using investors’ money to trade on the volatility of cryptocurrency exchange markets.
In truth, however, BitConnect operated a textbook Ponzi scheme by paying earlier BitConnect investors with money from later investors. Arcaro and his co-conspirators ensured that up to 15% of the money invested into BitConnect went directly into a slush fund to be used for the benefit of its owner and promoters.
As always, be watchful of any investment claims. If it’s too good to be true, it probably is.