Victims of the BitConnect Ponzi scheme will receive $17 million in compensation, according to the latest announcement by the US Department of Justice according to. The amount in question will be distributed among a total of 800 stakeholders in 40 countries in proportion to their investment.
Born in 2016 and then collapsed in 2018, BitConnect, which called itself a credit platform at the beginning, is officially recognized as a Ponzi scheme, or a kind of pyramid scheme. Its founder, Satish Kumbhani, was indicted in February 2022, but American influencer Glenn Arcaro, who promoted the platform’s services, pleaded guilty to federal fraud conspiracy charges as early as September 2021. At the time, both defendants were sued by the U.S. Securities and Exchange Commission because BitConnect sold more than $2 billion worth of its own digital securities without acting legally. Meanwhile, several jurisdictions, including the United Kingdom, Texas and North Carolina, have already begun taking measures to restrict the company’s operations. However, due to the project’s distributed structure and lack of central leadership, BitConnect pulled the plug even after it was officially shut down and targeted by regulators.
For years, BitConnect victims did not see a penny of their money invested. In November 2021, the Department of Justice seized $56 million in cryptocurrency with the intention of selling it to compensate victims of fraud. This $56 million worth of crypto-money would now be worth roughly $17 million (just as much as they want to “please” the wallets of those involved), but no more information was given in the announcement about when the seized crypto was sold.
In any case, $17 million was seized from BitConnect’s top advertiser alone, which is nowhere near the $2.4 billion the founders managed to pocket from their victims in the scam.
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