Court orders $17 million in restitution for about 800 BitConnect victims.

A federal district court in San Diego (US) ordered the distribution of $17 million among roughly 800 victims of the BitConnect Ponzi scheme, worth $2.4 billion.

Crypto Fraud Victims Receive Over $17 Million in Restitution from BitConnect Scheme https://t.co/skNM1pRLz9

— Criminal Division (@DOJCrimDiv) January 12, 2023

Restitution will go to victims in several countries.

The Justice Department noted that in September 2021, BitConnect promoter Glenn Arcaro pleaded guilty to wire fraud. The court ordered him to return $24 million to investors.

On February 22, 2022, prosecutors brought charges against the project’s founder Satish Kumbhani.

According to Arcaro, he conspired with others to defraud investors, exploiting their interest in cryptocurrencies. The scammers sold them proprietary BitConnect tokens during the ICO and promoted exchange trading of digital assets as a profitable investment.

“To be honest, BitConnect used a textbook Ponzi scheme, paying early investors with money from later investors,” the department said.

At the same time, pyramid organizers ensured that 15% of the funds raised went into a slush fund for the benefit of the project’s owners and promoters, the department emphasised.

In December 2021, the U.S. Securities and Exchange Commission (SEC) won a civil suit against Arcaro. The court barred him from participating in ICOs and certain marketing campaigns for life.

Prior to that, the SEC secured a court ruling concerning three more BitConnect promoters, who were ordered to pay a total of $13 million in restitution to investors.

Investors filed a class-action lawsuit against the company in January 2018 accusing it of running a wide-scale financial pyramid.

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