U.S. Authorities Seize $56 Million from Promoter of a Cryptocurrency Fraud Scheme

U. S. authorities said they will seize and sell around US$56 million in fraudulent proceeds from a conspirator self-described as the “number one promoter” of BitConnect, a cryptocurrency investment scheme which was in fact a Ponzi scheme.

Cryptocurrency FraudU. S. authorities said they will seize and sell around US$56 million in fraudulent proceeds from a conspirator self-described as the “number one promoter” of BitConnect, a cryptocurrency investment scheme which was in fact a Ponzi scheme. (Photo: Piqusels, License)It is the largest single recovery of a cryptocurrency fraud by the United States to date, the Department of Justice reported on Tuesday.

Glenn Arcaro, 44, of Los Angeles, pleaded guilty in September of taking part in a massive conspiracy to defraud investors of over $2 billion which they had put into BitConnect, the statement said.

The BitConnect scheme is the largest ever criminally charged cryptocurrency fraud scheme, it added.

Arcaro, who consented to the seizure, will appear in court on January 7, 2022 and faces up to 20 years in jail.

The U.S. Government will maintain custody of the seized proceeds and will use the funds to provide restitution to the victims of the scheme.

The FBI and IRS are investigating the case and the U.S. Postal Inspection Service is assisting with the liquidation of the cryptocurrency proceeds.

Arcaro admitted in September that he and others conspired to mislead investors about BitConnect’s purported proprietary technology, known as the “BitConnect Trading Bot” and “Volatility Software.”

They claimed the software was able to generate substantial profits and guaranteed returns — up to 40 percent per month — by using investors’ money to trade on the volatility of cryptocurrency exchange markets, the DOJ statement from September said.

“In truth, BitConnect operated a textbook Ponzi scheme by paying earlier BitConnect investors with money from later investors,” it added.